Is it a good idea to drive without car insurance?

Driving without car insurance is illegal in 48 out of 50 states. Maintain at least minimum coverage to protect against lawsuits, jail time, and other penalties.

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A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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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: Apr 28, 2020

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Here's what you need to know...

  • It is a terrible idea to drive without insurance
  • Insurance (or financial responsibility) is required everywhere in the US, so you’d be breaking the law to not purchase it
  • You could be ruined financially if you cause a wreck and have no insurance

No, it is never a good idea to drive without car insurance. Car insurance is a way for you to protect yourself from the negligence of others and to protect others from your negligence as well!

What’s more, some form of auto insurance is required in all 50 states by law.

Many people don’t look at car insurance as a form of protection.

They see it is a way for the government to control how they spend their money and, for those that have never been in an auto accident, it can truly seem like a waste of money each time the premium is paid.

The truth, however, is that your insurance could end up paying for itself if you have a single auto accident.

A minor fender bender can result in several thousand dollars in damage and a serious accident can cost in the tens of thousands of dollars. If you don’t have insurance and you caused the accident, that money will have to come out of your own pocket!

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Why can’t I decide for myself whether or not I carry car insurance?

There was once a time when car insurance was optional and people purchased it out of responsibility, not because it was a requirement. However, over time state after state adopted laws that required drivers to carry car insurance of some kind.

The reason for this is that accidents caused by people without insurance or money left the responsibility of repairs up to the driver who was not at fault.

What’s more, going to court was not an option for many people because if the other person didn’t have the money anyway, there was no point.

Today, car insurance is about protection. If you maintain an average car insurance policy and you cause an auto accident, then your insurance should cover the cost of damages and medical care for those you damaged or injured in the accident.

Conversely, if someone else causes the accident, then their insurance covers the cost of your damages and you don’t have to spend any money out of pocket.

If, however, you aren’t insured, there is no guarantee to the other party that you will be able to pay for the damages out of pocket. Of course, if the other person is not insured, then the same thing applies to them.

The bottom line is that, in order to limit court costs and individual costs, states now require each individual to carry their own car insurance policy. States have become very effective in enforcing those laws as well.

According to the Insurance Information Institute, one in seven drivers were without car insurance, which is a drop from previous years.

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What are the consequences of driving without car insurance?

Almost all states require you to have a minimum amount of insurance coverage. In the states where it is not required, you must provide proof that you would be able to pay in the event you were in an accident.

In the event you are stopped by a police officer, through a routine traffic stop or even a checkpoint, and you can not prove you have auto insurance, you can face a variety of consequences, from fines, to license suspension, to time in jail.

Even if you are a good driver, you cannot rely on other drivers and there may be a time when you are in an accident. Further ramifications of not having insurance include the seizing of your vehicle registration tags, as well as car impoundment.

Since most people do not have the ability to be without a vehicle due to a license suspension, or pay tens of thousands of dollars after an accident, a monthly payment towards insurance seems to be a much better option than taking the risk.

What are the benefits of car insurance?

First, it is always recommended that you read your policy thoroughly so that you are aware of the different benefits and what is covered. Depending upon the policy, it may cover:

  • Windshield chip repair
  • Reimbursement for a rental car in the event of an accident
  • Or even other people who drive your car

Each policy is different.

The benefits of car insurance are many; it can cover others if you are deemed to be at fault for the accident, including their vehicle damage and medical bills.

The costs for an accident can skyrocket and, if you are without insurance, you may find yourself unable to fulfill your financial responsibility. This opens you up to a variety of issues including potential lawsuits and credit problems.

There are different types of car insurance and each provides you with varying coverage.

  • Bodily injury liability will cover others if you are in an accident and determined to be at fault.
  • Property damage liability will cover the property of others in the event you should be responsible for the damage.

These are the two types which cover the minimum insurance requirements; however, you can also request collision coverage which will cover your own car.

The previous two types do not cover your own vehicle, which is why it is advisable to consider collision coverage as well when purchasing insurance.

Comprehensive coverage will cover almost anything that happens that is not due to a collision. For example, if your car is stolen or catches fire, it would be covered under a comprehensive insurance policy.

You can also purchase protection against other uninsured or underinsured motorists in case they are unable to fulfill their financial responsibility to you in the event of an accident.

Ultimately, the point of car insurance is to protect you. It limits your liability and can protect you against fraudulent claims of other drivers.

I have to go to work but I can’t afford car insurance, what should I do?

If you can’t afford car insurance, then you need to walk, ride a bike, or take a bus to work. This may seem hard, but the truth is that if you already can’t afford car insurance, what is going to happen if you cause an auto accident?

There are some truly low prices available on auto insurance and if you can’t afford the coverage for your vehicle, then you need to consider a vehicle with more affordable coverage options.

For example, if you purchase a non-sports vehicle from the mid 2000s with great safety features and liability-only insurance, you can get insurance for as low as $20 a month.

Of course, this is based upon a great driving record and modest driving.

The point is that you shouldn’t be driving if you don’t have insurance and wanting a late model car is no excuse for owning a vehicle for which you can’t pay your insurance premiums!

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I’ve been in an accident with a driver who doesn’t have car insurance, what should I do now?

It is a tough situation to be in when you are hit by a driver with no insurance. It is for this reason that some states also require drivers to carry uninsured/underinsured auto insurance.

This coverage gives you additional protection should someone who isn’t insured strike your car.

The downside to this is that if your insurance company has to pay a claim on your vehicle, it is your insurance rates that will increase. It won’t be as much as it would be if you were the cause of the accident, but it is still frustrating to take on that cost.

Your other option is to take the other person to court and sue for damages. The downside to this is if they don’t have any money then you aren’t going to get anything other than the satisfaction of knowing that you’re right.

You can check out some of your legal options at Cornell University’s Legal Information Institute’s insurance page!

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