What should I do if I can’t afford car insurance?

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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...

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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...

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Reviewed byJoel Ohman
Founder, CFP®https://res.cloudinary.com/quotellc/image/upload/insurance-site-images/ciccom-live/41b5e36b-joel-ohman.jpg

UPDATED: May 29, 2020

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The average person would prefer not to spend their hard-earned paycheck on auto insurance bills. While this is not an expense that you look forward to paying, it is an expense that you must budget for if you want to be a responsible driver and if you want to stay legal. In virtually every state, you are required by law to carry liability coverage, personal injury coverage, or both. Failing to carry the state-mandated coverage when you own a vehicle registered for personal use can land you in some serious trouble with law enforcement, the courts and even with the Department of Motor Vehicles. Start comparing car insurance rates now by using our FREE tool below!

Owning a car comes with several different obligations. One of the financial obligations is that you will maintain your insurance so that you have financial protection and others can be compensated when you cause damages. Not having the budget to pay for your insurance premiums is not an acceptable excuse to let your coverage go. You may not be able to afford your current policy, but there is a good chance that you can find new discounts, value-priced plans, or basic cover that will fall into your limited budget. If you would like tips on how you can find insurance that you can afford, read this guide.

What are the consequences of driving without insurance?

If the fact that auto insurance is a requirement is not convincing enough to keep your cover active, you might want to learn some of the consequences of driving without insurance. The penalties for driving uninsured will vary from state to state, but many of the indirect consequences are the same.

The money you might save in eliminating a small monthly payment will be spent to pay court fees, fines, and more.

All states will punish drivers when they are caught violating the vehicle code, but the severity of the punishment depends on how strict the courts are and your criminal record. Since so many states are buckling down to combat rising rates of uninsured motorists, the fines are greater than ever.

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Assessed Penalties for Driving Uninsured

  • Fine between $100 and $1000 for first offense
  • Fine between $500 and $1500 for second offense
  • Vehicle impounded for up to 30 days
  • Storage and impound fees
  • Suspension of license plates
  • Suspension of driver license for multiple offenders
  • Payment of reinstatement fees
  • Requirement to file an SR-22
  • Jail time of up to 6 months

Indirect Consequences of Driving Uninsured

The direct penalties for driving without insurance, but many often overlook the indirect impact just one infraction can lead to. By choosing not to insure your vehicle, you will be required to appear in court. Since appearing is a requirement, you will miss work and lose income. Add in the fact that you will be assessed a fine and may have to live without a car while your vehicle is impounded, and you can see where the inconvenience will lie. If the courts order that your license or plates must be suspended, you may have to turn to public transportation as you try to get everything in order with your already restricted budget.

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How to Find Car Insurance That You Can Afford

With the electronic insurance verification systems that have been developed, you can be penalized for being uninsured even when you are not caught. This means that any cancellation can lead to financially devastating fines that are difficult for low-income drivers to pay. The only way to really avoid being penalized is to find coverage that you can afford to pay month in and month out. Here are some tips on saving money off of your premiums so that you are not forced to drive uninsured:

  • Lower Premiums for Physical Damage or Eliminate It

Physical Damage Coverage may not be required by the state, but it is required by lenders and lessors when the vehicle is financed. If you were to completely eliminate comprehensive and collision coverage from a vehicle that has an additional insured, the company is going to force-placed insurance so that it only protects the lender’s interests. This raises the cost of your loan, affects principal, and will cost you more in the long run.

You can raise your deductibles to lower your premiums when you are required to carry physical damage. Typically, raising your collision deductible will save you the most amount of money because the premiums for this cover are high. If you are not required to have full cover and your vehicle does not hold much value, erasing it from your policy could be the answer to affordability.

  • Combine Your Policies

If there is more than one car in your home or if you have another line of insurance with another company, combining your insurance can save. Almost all companies offer multi-car and multi-policy discounts that can save you between 15 and 40% off of many of your coverage options. You need auto insurance and you need property insurance, so why not save?

  • Find a More Affordable Car

The answer might be all in the car. If you have an unsafe car or a car that has a high-risk claims record, you may need to go car shopping. Pricing the cost of car insurance before you begin to car shop can really help you dwindle your rates down. Look into some of the cheapest cars to insure to get a jump start.

  • Exclude a High-risk Driver

If there is a high-risk driver in your home, your premiums may be high because of the risk that they present. If this driver does not operate your car, you can exclude them and they will not be rated. Just be sure that they really do not drive your car because claims will not be covered.

No one wants to be select the most basic policy, but this is always an option. Before doing this, it is wise to begin comparison shopping so that you can find a company that will really offer you affordable cover. Comparison shopping is like window shopping in the marketplace, and it is the best way to save. Start comparing car insurance now by entering your zip code in our FREE tool below!

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