Alternatives to Auto Insurance: Surety Bonds

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Here's what you need to know...
  • Surety bonds are a valid alternative to traditional car insurance coverage
  • Not all states allow surety bonds
  • You should research your options before deciding whether alternative car insurance is right for you


Generally, most people today purchase auto insurance because it is required by law. Each state has its own laws concerning their citizens’ civic responsibility, and individuals must abide by these laws to prevent being penalized.

However, there is an alternative to commercial automobile insurance for drivers in many states; they’re called surety bonds. Surety bonds are expensive, but they may be right for you.

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How do you know if alternative car insurance is the right choice for you? Keep reading to learn the benefits, as well as the requirements for surety bonds.

Reasons to Purchase Alternative Car Insurance

Perhaps the most common reason for purchasing auto insurance is to protect your financial assets; it’s as simple as that. You must compensate the injured party if an auto accident is proven to be your fault. This includes:

  • medical bills
  • repair bills
  • funeral expenses

Without this insurance, the burden will land directly on you, and it’s possible you could lose all your valuable financial possessions in the end.

Only a very small percentage of the population is able to pay out of pocket for a large auto insurance claim or settlement, or for that matter, even a small one.

Without auto insurance as financial protection, the payment for such claims or settlements would have to come from somewhere. This is where surety bonds come into play.

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Surety Bonds as Alternative Car Insurance

Ideally, an alternative way to insure yourself is through surety bonds. By doing this, you are avoiding purchasing a standard auto insurance policy from an ordinary insurance company.

While this choice is not available in all 50 states, if you’re fortunate enough to live in a state in which surety bonds are an option, you can buy a bond for the exact same amount as the bare minimum insurance policy coverage, per your state’s insurance laws.

Additionally, you also have the option of paying a down payment to the DMV for the same cash equivalent as insurance coverage. However, surety bonds are still most likely a better option because you pay only a percentage of the amount rather than the face value.

Before deciding to purchase a surety bond, you would want to research the whether surety bonds are available in your state.

Once you have confirmed this fact, you should consider shopping multiple surety bond companies to be certain that you have chosen a reputable, well-established one that has been in business for a number of years.

If you find a company that you want to work with, make arrangements with one of the company’s sales representatives to make payment and complete all the required paperwork for the bond to be secured.

Once secured, proof of payment for the bond will be provided, and must be carried in the vehicle at all times.

Alternative Car Insurance for Businesses

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In a number of states, surety bonds are not available. Instead, individuals must rely on ordinary insurance, or pay the Department of Motor Vehicles a cash deposit. However, a business would be in the position to take full advantage of surety bonds.

It’s important to remember that each state will have its own set of rules and requirements for this type of financial safety.

For example, in the state of Washington, at least 26 vehicles must be owned and a minimum of $60,000 must be secured to even qualify for a surety bond. The state’s Department of Motor Vehicles can provide specific and additional details concerning this issue.

Every individual needs to consider whether alternative car insurance–such as surety bonds–is a better choice than ordinary auto insurance.

Purchasing an auto insurance policy is certainly the most popular option, as it’s simple and convenient to do.

However, you might consider purchasing a surety bond instead if the insurance premiums you’re quoted are too expensive, or if you’re unable to secure a regular policy for some other reason.

Businesses with a fleet of vehicles may want to think carefully about their choices, but buying a surety bond is generally more economical in the long run than paying for each individual vehicle.

To compare alternative car insurance rates from multiple companies, enter your zip code now!

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