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Is it illegal to have a car without insurance?

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Here's what you need to know...
  • If you live in a state that has a mandatory insurance law, it is illegal to drive any vehicle that you own without insurance
  • Some states have financial responsibility laws where you have alternatives to buying auto insurance
  • Some different alternatives to buying auto insurance include: depositing cash with the Treasurer, purchasing a surety bond secured by property, or applying for a self-insurance certificate
  • If you’re caught driving without insurance, you can face fines, court fees, license suspension, registration suspension, court-ordered community service, and jail time
  • In tort states with mandatory insurance laws, you’re required to have liability insurance, whereas, in no-fault states, you’re required to carry Personal Injury Protection

When you buy a car, you should also be prepared to purchase auto insurance.

The true cost to own a car includes not just the purchase price of the car and titling fees, but also the cost to maintain the vehicle and the cost to insure it.

Having insurance will provide you with the protection that you need to safeguard your assets and your future wages.

While auto insurance is a product that you need, it’s not always required under state law. In most states, it’s the vehicle owner’s responsibility to

In most states, it’s the vehicle owner’s responsibility to insure the vehicle by purchasing at least a minimum amount of coverage that’s mandated by state officials.

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Mandatory Insurance Laws


Have you ever wondered why auto insurance requirements change when you move to a new state?

While many assume that insurance laws are written at the Federal level, they are enacted by the state. In fact, it’s been this way since the McCarran-Ferguson Act was passed back in 1945.

Since it’s the state legislature’s job to enact laws that protect consumers, the requirements vary from state to state.

The legislature will review and revise state laws when necessary and oversee the state insurance department that protects the interest of policyholders who pay for car insurance products.

A majority of states have passed a mandatory or compulsory auto insurance law.

If you live in a state where auto insurance is mandatory, you must purchase a minimum amount of coverage to drive legally any vehicle that is registered in your name.

There is no other way to comply with a compulsory insurance law than to buy auto insurance coverage.

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What is a financial responsibility law?

One alternative to mandatory insurance laws is the financial responsibility law. In states with financial responsibility, you must demonstrate your financial ability to pay for losses that you’re negligent for if you’re in a car accident.

One way to show evidence of your ability to pay is to buy liability motor vehicle insurance.

While the most popular way to comply with financial responsibility laws is to buy insurance, you do have other options as well.

Vehicle owners who don’t want to buy auto insurance should know about the alternative proof filing methods that are available to them.

Here are some of the most popular choices:

  • Making a cash deposit with the Division of Motor Vehicle (typically the minimum deposit is equal to the minimum amount of liability insurance required)
  • Applying for a self-insurance certificate
  • Purchasing a secured surety bond issued by a surety company in the state

What type of insurance is required in states with mandatory insurance laws?


If you do live in a state where you’re required to buy insurance, you should check to see how much insurance is required. The limits and coverage requirements vary from state to state.

The requirements are very much dependent upon the type of insurance system that the state operates under.

There are currently two types of systems: tort systems and no-fault systems.

What type of coverage do you need to carry in tort states?

In tort states, it’s the at-fault driver’s responsibility to pay for the victim’s property and their medical expenses when they are in a crash.

Since you have to compensate the victim for damages, you’re required by law to carry third-party liability insurance.

Some states even require you to carry first-party coverage to pay for your expenses.

Here’s a list of coverage requirements:

  • Bodily Injury Liability – Pays for medical expenses, pain and suffering claims, and loss of wages
  • Property Damage Liability – Pays to repair someone else’s vehicle when you damage it
  • Uninsured Motorist – Pays for your medical expenses and lost wages if you’re hit by someone who doesn’t have insurance (only required in some states)
  • Medical Payments – Pays for reasonable medical expenses you incur after an accident regardless of fault (only required in some states)

What type of coverage do you need to carry in no-fault states?


In no-fault states, your benefits will pay for your medical expenses incurred after an auto accident. The reason for the first-party benefits is to reduce the state’s reliance on the court system to resolve personal injury claims.

You must carry first-party auto insurance benefits.

Here’s what’s required in most no-fault states:

  • Personal Injury Protection – Pays for your medical expenses, disability income, rehabilitation costs, and other related expenses when you’re injured in an auto accident
  • Property Damage Liability – Pays for damaged property that you don’t own if you cause the accident (no-fault only applied to injury claims)
  • Bodily Injury Liability – In states with a modified no-fault system, you may be required to carry Bodily Injury that helps pay for injury claims when someone has the right to sue you for their injuries

While it’s not always illegal to drive a car without insurance, it’s never recommended. If you want to protect what you have worked so hard to save, you should buy at least a minimum amount of auto insurance.

Price rates by using our FREE insurance quote comparison tool by entering your zip code. After you review instant quotes, you can buy the best policy for you.

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