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Nearly one in eight drivers does not have auto insurance, according to a 2021 report by the Insurance Research Council. Joining this not so exclusive club is a terrible idea.
Not only will you face legal consequences, such as fines and even jail time, but you will also face insurance consequences. And if you cause a car accident that results in property damage or injury while driving without auto insurance, the financial fallout can be devastating.
Every state has some form of “financial liability” law, which means you must have a way to pay if you or someone driving your car causes an accident. An impractical way to meet financial liability is to pay a government bond of up to $ 50,000. But the easiest and most affordable way to take responsibility for financial responsibility is to purchase auto insurance.
Every state requires a minimum amount of auto liability insurance (even New Hampshire and Virginia under certain conditions). And if you get caught driving without auto insurance, there’s a good chance you’ll be in financial trouble.
Fines, fees and slammer
Driving without insurance can put you in legal hot water. Here are some of the consequences you might face:
- Fines. If you are caught driving without auto insurance, at the very least, you can expect a fine of between $ 100 and $ 1,500, depending on your state.
- Suspension of license. In some states, your license will be suspended and cannot be reinstated until you purchase auto insurance. In other states, the suspension may be more severe. For example, if you don’t have auto insurance and you cause an accident in New York City, you could lose your license for up to a year.
- Suspension or revocation of vehicle registration. Driving without auto insurance can result in the loss of your vehicle’s registration. For example, in Massachusetts your vehicle registration will be suspended indefinitely until you provide proof of insurance.
- Impoundment of the vehicle. In some states, such as California, your vehicle could be impounded if you are caught driving without insurance.
- Costs. If your license is suspended, registration revoked, or your car is impounded, you will need to pay a fee to fix these issues.
- Jail time. Yes, driving without insurance can land you in jail. Most states will not impose jail time on first-time offenders, but some do. For example, in Michigan, if you drive or allow someone to drive your uninsured car, or drive a car that you know has no fault-free insurance, you could spend up to a year behind bars.
If you don’t learn your lesson the first time, the legal consequences can become more serious. The second and subsequent offenses will usually result in harsher penalties, including high fines and an increased likelihood of being punished with jail time.
Examples of legal consequences for driving without automobile insurance (first offense)
Higher insurance rates and big bills
Driving without auto insurance can get you into legal trouble and it will hit your wallet hard as well. Here are some insurance consequences you may face:
- Higher auto insurance rates. If you drive without insurance, you will have what is called a âcoverage gapâ. Insurers see a coverage gap as a higher risk to insure, which means you’ll pay higher rates.
- Car repair invoices. If you cause a car accident without insurance, you won’t have coverage for repair bills on your own car or the other driver’s car, which means you could be forced to pay significant expenses, especially if the accident results in a totalized car. And if you damage someone else’s property, like a fence, you’ll pay for that too.
- Medical fees. If you cause an accident that results in injury, you could be held responsible for medical costs. The average cost of a personal injury claim in 2017 was $ 20,453, according to the latest report from the National Association of Insurance Commissioners. If you don’t have the money to pay, you could be sued, putting your assets, savings, and home at risk.
Related: What exactly can you take away from a lawsuit?
How much will my insurance increase if I get caught driving without insurance?
Driving without insurance will give you a coverage gap, which is frowned upon by auto insurance companies. A gap in your insurance is likely to impact your wallet when you buy your next policy.
Here’s a look at the rate differences for those with no coverage gap and those caught driving without insurance.
How do the police know if a car is not insured?
If you are in a car accident or are pulled over by the police, it doesn’t take a seasoned sleuth to find out if you don’t have auto insurance. Here are some ways the police know if a car is uninsured:
- You do not have active insurance registered with the Department of Motor Vehicles (DMV). Insurers in many states are required to report active insurance policies to the DMV. Some police departments have access to DMV records from their patrol car and can determine if you have an active insurance policy.
- Automated License Plate Readers (ALPR). Some states allow the use of cameras mounted on police cars, traffic signs, and traffic lights. For example, the Oklahoma Uninsured Vehicle Enforcement Diversion uses photos of license plates and compares them to the Oklahoma Insurance Verification System in an effort to reduce uninsured drivers.
- The agent asks for your insurance ID card. Cops don’t necessarily have to rely on technology. They can use this old-fashioned way of asking you for proof of insurance. This is usually a paper or digital document stored on a mobile application that contains your information along with your insurance policy number and effective dates.
How to get auto insurance
The legal and financial consequences of driving without auto insurance are not worth the risk. Here’s how to find an auto insurance policy that meets your coverage needs and budget:
- Don’t trust the minimum requirements. Driving without auto insurance can lead to financial disaster, as can purchasing inadequate coverage. Your state’s minimum insurance may not be enough if you crash into an accident with multiple injuries, which means you’ll have to cover significant expenses. And the minimum requirements won’t cover your auto repair bills because states don’t require collision insurance.
- Protect yourself from other uninsured drivers. If someone without insurance hits you, you’ll want coverage for medical bills. Coverage for uninsured motorists is required in some states and optional in others. This covers your medical bills and other expenses, such as lost wages, pain and suffering, and funeral expenses.
- Compare quotes to save. If a tight budget makes you hesitate to purchase insurance, now is the time to shop around. The cost of the same coverage will vary widely from one insurance company to another, with some charging significantly more than others. Once you know the amount of coverage you need, compare car insurance quotes from at least three companies to find the most affordable. For example, we found that average rates differed by $ 1,230 among the top 10 low-cost auto insurance companies we surveyed for a driver caught without insurance.
- Ask for discounts. You can also lower your rate by inquiring about auto insurance discounts. The most common include bundling your auto insurance with home or home insurance, insuring more than one car, and paying your bill in full.
What if I need to get SR-22 insurance?
Drivers who are considered high-risk (such as drivers who get caught driving without insurance) are often ordered by a court or the state to purchase SR-22 insurance. An SR-22 is not insurance. It’s a form filed by your insurer with your state that indicates you have auto liability insurance requirements. In some states, the form is referred to as SR-44 or “Certificate of Financial Responsibility.”
If you already have auto insurance, your insurer can file a document with your state. If you need to purchase auto insurance, you will need to inform your insurer of the SR-22 requirement. Your new insurer will file the SR-22 on your behalf (for a fee).
In some states, you will need to drop off an SR-22 even if you don’t own a car to restore your driving privileges. An auto insurance policy for non-owners can meet this requirement and therefore you can get the SR-22.
Best Auto Insurance Companies 2021
With so many choices for auto insurance companies, it can be difficult to know where to start in finding the right auto insurance. We’ve evaluated insurers to find the best auto insurance companies, so you don’t have to.