As far as I'm aware, every state does. I know Illinois does as well. But there are PLENTY of people who don't have insurance... The insurance law isn't obeyed much more than the seatbelt law.
I hear ya, man. There's a few people paying a lot more than they should have to for full coverage (I'm now one of them), and there are masses of people with no insurance. Makes perfect sense...bleh.
Well in Virginia, no insurance is a serious deal. When you register a car, in order to get the license plates, the initial license plate tags, and every year when you have to renew your county decal - you must show proof of insurance. You can get the annual stickers but at the same time it's a pretty heafty fee of something like a minimum of $500 for an uninsured motorist. If one doesn't pay the uninsured motorist fee or contact the DMV to remove the vehicle from the road (which you must turn in your plates as proof), you automatically get negative points on your driving record (which raises insurance obviously). What's worse is like I said, it is still illegal, so even if you have paid the uninsured motorist's fee, if you ever get pulled over and when they run your tags you'll get anything from a decent fine to impoundment of the vehicle or revocation of your license. So, it's still a loss-loss situation if you do go for the uninsured motorist fee - so most just pay for liability anyway.