Which states have no required liability car insurance?

The only state with no car insurance requirements for liability coverage is New Hampshire. In NH, you are required to be financially responsible for any accident that you cause.

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Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Jan 22, 2021

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Here's what you need to know...

  • Although most states require liability car insurance, there are some states that do not
  • The states that don’t require minimum liability insurance still have laws that require you to be financially responsible in an accident
  • Some states require proof of your financial ability to cover accident costs
  • Other states may require you to post a bond in order to avoid buying car insurance

Did you know that there are a few states where no liability car insurance is required as a standard? Before you get all excited about the possibility of not having to pay car insurance, you do need to know that you are expected to have an alternative to liability insurance in place.

The other option is to purchase a bond with the department of insurance or possibly the DMV depending on where you live, to prove that you have the means to adhere to the financial responsibility laws set in each state.

This could mean paying thousands of dollars or just a few hundred dollars, depending on where you live.

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Essentially, what this means is that even though there is no requirement for liability coverage, this only applies if you have the financial means to prove that you can cover the cost of an accident. Of course, there is one exception and that is New Hampshire.

New Hampshire Car Insurance Requirements

New Hampshire is the only state that doesn’t have set car insurance requirements in place.

However, it is the only state where, if you cause an accident, don’t have the cash to cover the damages, and have chosen not to buy insurance, your wages are allowed to be garnished to pay for the damages you caused!

Simply put, New Hampshire requires you to be financially responsible for any accident that you cause. If you choose not to carry car insurance then your personal assets, as well as your cash and current and future earnings, are in jeopardy.

What’s interesting about New Hampshire is that if you choose to carry car insurance, you must carry the minimums that they set.

The minimums in this case are $25,000/$50,000 liability, $25,000/$50,000 uninsured/underinsured motorist coverage, $25,000 property damage, and $1000 PIP.

According to the New Hampshire Insurance Department, if you have an accident and you don’t have insurance and you don’t have the money to pay for the damages, your license can be suspended.

In addition, you will be required to carry the minimum coverage mentioned above from that point forward.

Additionally, you will be required to buy liability insurance if you have

  • A DUI/DWI conviction
  • Been in a car accident
  • Been cited for reckless driving more than once

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States that Require Proof of Financial Responsibility

States that require proof of financial responsibility or liability car insurance are:

  • Tennessee – Tennessee law requirements for liability coverage are $25,000/$50,000 for bodily injury and $15,000 for property damage. You must prove financial responsibility to the state before it will allow you to forgo liability insurance.
  • Virginia – The Virginia requirements are $20,000 for property damage, $25,000 for bodily injury or the death of one person, and $50,000 for bodily injury or the deaths of two people.

According to the Virginia Department of Motor Vehicles, you can drive without liability insurance in Virginia if you place a non-refundable $500 deposit with the DMV each year.

If you don’t have the deposit in place and you aren’t carrying insurance, your license will be suspended.

If you cause an accident and don’t have the money to pay for the damages, then you can be sued in court and the state will suspend your license, as well as charge you fees.

If you think that Wisconsin should be on this list, you need to be aware that in 2011 the laws in Wisconsin changed and now liability insurance is a requirement. If you haven’t purchased your insurance there yet, the fines are up to $500 if you are caught.

Alternatives to Liability Insurance in Other States

You might be surprised to learn that some other states will waive your liability insurance requirements as well. However, it doesn’t work the way that the states mentioned above work.

In these cases, you will be required to buy a bond that is equivalent to the minimum liability requirements. So, if your requirements were $25,000/$50,000, then you would need a $75,000 bond.

This may seem outrageous to you, but consider this: If you don’t have an accident and you move away, that money is returned to you! Of course, if you have an accident, and you use some of that money, you will have to replenish the bond.

This option is sometimes used by businesses that don’t want to pay high liability fees for a fleet of vehicles. However, this is more the exception than the rule.

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