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Cash for Clunkers Program Requires Proof of Insurance

Some consumers living in states not requiring auto insurance coverage will be unable to secure the government subsidies offered for trading in gas guzzlers under...
August 4, 2009

Some consumers living in states not requiring auto insurance coverage will be unable to secure the government subsidies offered for trading in gas guzzlers under the "Cash for Clunkers" federal program. Under the program designed to put newer, more fuel efficient cars on the road, auto buyers receive either a $3,500 or $4,500 credit for their trade-in depending upon the fuel efficiency of the new car compared to the old one.

One of the rules provisions of the "cash for clunkers" program issued by the National Highway Traffic Safety Administration (NHTSA ) is that consumers must prove they have had insurance for a year on the car they are replacing. Proof of insurance must consist of one or more insurance identification cards with pertinent vehicle information, including length of time the car was insured; insurance policy documents; or a signed letter with insurance company letterhead from the carrier with necessary information. NHTSA said it recognizes that not all states require drivers to purchase auto insurance, but makes no exception for those without insurance because Congress' intent is clear.