Is it illegal to have a car without insurance?

Owning a car without insurance is legal if it is not required to be registered or is not driven. You still may want to carry comprehensive coverage to protect your car while it's in storage.

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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: Jan 31, 2021

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Here's what you need to know...

  • Every state has its own unique insurance law requiring a specific limit of coverage
  • If your vehicle is registered to be driven, you must carry insurance on that vehicle
  • Individuals who own vehicles that are non-operational may not need coverage

Owning a car in the United States is the norm. If you’re a vehicle owner, it’s your job to understand your responsibilities and obligations so that you can be sure that you’re complying with the law.

Not only do you need to comply with DMV laws and contractual lending agreements, but you also must buy insurance.

Read on, and find when vehicle owners are required to have insurance and when they’re safe to go without in the eyes of the law.

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How do insurance laws differ by state?

United States of America map-1600x1600

Every state has its own unique compulsory insurance laws or financial responsibility laws to protect all drivers and pedestrians on public roads.

If you own a car and that car is registered to be legally driven, you have no option but to comply and prove that you’re able to cover any third-party damages that you could cause in your car.

You’ll need to check your state-specific requirements so that you know how much coverage and what type of coverage you’ll need to avoid being penalized by state officials.

Some of the most common basic coverage requirements include:

If you ever move, it’s also imperative to brush up on the news coverage requirements before you transfer coverage through a carrier licensed in your new state.

Contrary to popular belief, you can’t simply change your mailing address when planning an out-of-state move.

You must actually have the policy rewritten under the rules of the new state through a provider that’s applied for and been granted permission to sell insurance through the state’s Department of Insurance.

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Why is auto insurance a requirement?

It’s only natural to wonder why you’re required to carry auto insurance but not other types of policies life insurance or disability insurance. At face value, it looks as if it’s a fair comparison but, in essence, it’s not.

This is because life insurance and disability are both products that provide you or your loved ones with benefits to recoup from death or an accident.

The required auto insurance coverage limits, on the other hand, are designed to give third parties who suffer damage while you’re behind-the-wheel an outlet to collect from.

While there are different types of coverage that can be built into a personal auto policy, these are optional and can be rejected either verbally or in writing.

Since cars can also be weapons, residents who choose to own a vehicle must operate it safely.

No matter how safely you drive, there’s a chance that you can have an accident.

Since accidents aren’t 100 percent preventable, officials have set laws so that everyone has the financial means to pay for others’ repair and hospital bills.

Are there other ways to prove you’re financially responsible?

There are two different types of laws concerning auto insurance: mandatory insurance laws and financial responsibility laws.

In states with mandatory insurance laws, residents have no choice but to buy an insurance policy. In states with financial responsibility legislation, you can prove that you have the resources to cover damages in more than one way.

Insurance is still the most popular option in states with these financial responsibility laws, but you can also put up your own money or purchase a surety or real estate bond to play by the rules.

Remember, if you choose to put up your own money or your home as collateral you’re risking losing all of this if you’re at fault in a catastrophic loss.

Insurance premiums add up, but it’s a very risky gamble to avoid paying premiums by putting up your assets.

If you’re willing to take 100 percent of the financial burden to avoid paying premiums, these are alternatives to consider where you can self-insure.

Do you need insurance if your vehicle is not registered?


You may not be able to legally drive without insurance or another type of proof that you’re financially responsible, but these rules only apply to vehicles that are registered and have valid plates.

If you have a car that’s not required to be registered, it doesn’t require insurance.

This is also true when you own a vehicle that you have decided to put in storage and that you don’t plan on driving in the near future.

As long as the vehicle is parked on your own property or in a garage and you have no plates or non-operational plates, you don’t have to worry about being fined for failing to buy coverage.

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What are the risks of choosing not to insure a car in storage?

If you’ve already turned in your plates or the car has never been registered, it’s nice to know that you can avoid paying for insurance premiums.

While it’s legally allowed, you still have a need for a minimal amount of coverage to pay for damages that can occur while the car is stationary.

Some owners choose to carry a suspended car insurance policy or storage policy that provides only comprehensive coverage.

Doing this also helps you keep coverage active so that you can receive loyalty discounts and prior insurance discounts when you buy another car. It’s also nice to know that if your car is stolen, vandalized or catches fire it will be covered for repair.

If you need insurance to comply with the law, now is the time to shop premiums.

By comparison shopping, you can find the lowest premiums possible.

To save yourself time, use a comparison shopping tool and get instant quotes all at once. You’ll be surprised at how affordable car insurance can be.

Start comparing car insurance rates now by entering your ZIP code in our FREE tool below!

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