Do I need insurance to park my car on the road?

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Joel Ohman
Founder, CFP®

UPDATED: Oct 9, 2018

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Here's what you need to know...

  • Failing to insure a vehicle, even if it is just parked, can lead to some very hefty fines and even criminal misdemeanor charges that can affect you in the long run
  • Insurance requirements for parked vehicles vary according to the state you live in but registration is essential for ever vehicle despite if it is regularly driven or not
  • States have implemented electronic verification systems as a way to easily track registration and insurance for motorists
  • Anyone who owns a vehicle that is being operated or parked should take the time to learn about  insurance requirements or financial responsibility laws in their state

Many assume that the only scenario where car insurance is required is when a vehicle is being driven. While the only time you can be found legally liable for an accident is when your car is being driven, you still have an obligation to insure your vehicle in other circumstances.

Every municipality has their own rules on where residents and guests are allowed to park and how long their vehicles can be parked in one place.

While many neighborhoods have a silent parking etiquette, you might be shocked to learn that the parking spot in front of your house in your residential neighborhood does not belong to you.

Instead, that curb where vehicles can be parked belongs to the city and not the property owner. When parking on streets, whether they are residential or not, you will need to have some form of insurance coverage.

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When is insurance required on parked cars?

A modern sports car parked at the beach.

If your car is parked on your private property, having insurance may be beneficial but not required. It is when the car is parked on the road that belongs to your city or your municipality that the benefit turns into a requirement.

— Valid Registration

Cars are required to be registered for a reason. When a vehicle is registered, officials can easily locate the owner of the vehicle, send tickets, and verify that the car can legally be driven.

The registration is essentially like an ID card for a car.

Every state has their own ordinances when it comes to parking, but in all states, the car needs a valid registration before it can be parked on public roads.

It is fine to park an unregistered vehicle in a private yard, a storage facility, or in your driveway. However, if the car is not registered to be operated it cannot be parked in spaces that are meant for cars that come and go.

Allowing unregistered vehicles to park on the street is an open invitation that says it is okay for vehicle owners to drive cars without valid plates.

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— Parking Restrictions

Some states have stricter rules than others regarding registration and parking on the road.

Instead of solely requiring a valid registration, states that have limited parking and an overload of registered vehicles are passing bans that will not allow owners with out-of-state plates to park on the street.

In New York, where this new ban is being proposed, out-of-state cars are treated like cars that do not have a registration at all.

All Vehicles That Are Registered Must Have Evidence of Financial Responsibility

If you review most ordinances, they will not specifically state that vehicles need to be insured to be parked on the street.

If you understand financial responsibility laws or mandatory insurance rules, you will quickly see how parking, registration, and insurance all go hand-in-hand.

Every state has its own unique  liability insurance laws. Some states allow residents who file for a self-insurance certificate with a bond to forgo buying insurance, but a majority of people who stay in compliance with the law choose to buy coverage.

The only time that you can get away with not buying coverage while you still have valid plates is by purchasing a bond or by placing a deposit as large as $30,000.

To register your vehicle in any state, you will need to show that you will be financially responsible for the damages or the bodily injuries that you could cause.

If the car is not insured, you cannot maintain your registration. Since a car must be registered to be parked on the street and insurance is required for registration, insurance is an indirect requirement.

Some of the penalties for failing to maintain continuous insurance include:

Will the DMV find out if my insurance is canceled?

If you have an uninsured vehicle, your registration will be suspended, but this leaves some wondering how the city can find out your coverage is not valid.

In the past, a huge portion of uninsured vehicles had insurance that was canceled after the car was registered. However, cities all across the nation have now implemented digital verification systems.

Electronic verification systems work because the state has regulations that require carriers licensed to do business to report certain changes immediately. Changes that must be reported include:

Changes that must be reported include:

  • Activation of new coverage
  • Failure to pay cancellation
  • Voluntary cancellation request
  • Non-renewal of insurance

The vehicle owner is sent a notice and asked to provide valid insurance when insurance cancels. If this does not happen in 14 to 30 days, the plates are suspended.

If a parking enforcement agent runs the plates, they will see they are not active and will order for the car to be towed.

It Pays to Follow the Rules

If a car is simply parked, it is tempting to take the no-insurance risk.

As tempting as it is, the choice will cost you if you are caught. It takes just 15 minutes of leaving a car unoccupied to be forced to deal with expensive headaches and major hassles.

If you need insurance and you are not sure where to begin, start comparing rates now by entering your zip code in our FREE tool!

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