When a brand new car is purchased by its first owner, that owner gets some cheap car insurance quotes, buys a policy, and acquires license plates and registration from his state. At that point he can then legally drive the vehicle on the road. If he decides to cancel his car insurance, or lets it lapse in the future, he's no longer allowed to take the vehicle off his own property. But what happens to the license plates?
The relationship between the license plates and car insurance is a matter of state law. The way the American system is set up gives jurisdiction over motor vehicle law to the states rather than the federal government. That means each of these 50 separate entities has its own laws relating to insurance, registrations, and plating. As an example of how different these laws can be we'll consider New York and California.
Insurance and Plates in New York
In the New York State a car owner must carry a minimum amount of liability insurance in order to register a vehicle. When a car is first purchased that driver must submit an insurance company ID card to the Department of Motor Vehicles at the time of registration. As long as all of the driver's paperwork is in line with regulations the DMV will issue a registration and provide the license plates.
Now, here is one of the interesting things about New York state law: the car owner and registrant do not have to be the same person. However, the name on the registration must match the name on the insurance ID card.
If a NY driver allows his insurance to lapse his registration is automatically null and void; he must remove his license plates and surrender them to the DMV with the registration. If he should sell the vehicle the same procedure is followed. In New York State plates do not remain on a vehicle for its lifetime. They are only applicable to a vehicle under the same owner with valid car insurance.
Insurance and Plates in California
California residents must also provide some sort of proof of financial responsibility in order to register a vehicle for the first time. Unlike New York however, they don't necessarily have to purchase affordable car insurance. There are a couple of other options that can be found by visiting a local DMV office. Yet regardless of which option a driver chooses, proof must be furnished to the DMV in order to acquire registration and license plates. The major difference between New York and California in this area is that once license plates are assigned to a vehicle they remain with that vehicle permanently.
Should a car insurance policy lapse the registration for that vehicle is automatically suspended when the insurance company notifies the state the policy is no longer in force. Drivers who have not sold their vehicles can file an affidavit with the state as such to avoid being penalized should they decide to reinstate the registration later on.
If a vehicle is sold, the registration and plates are transferred to the new owner with the signature of the previous owner on the registration card. It's then the responsibility of the new owner to take the registration card and proof of financial responsibility to the DMV to get updated documents.
If you're at all unsure about the relationship between your car insurance, registration, and license plates, don't hesitate to contact your local DMV office. They will be able to answer questions on the phone or in person. You can also check your states website as well.