Mathew B. Sims is Editor-in-Chief and has authored, edited, and contributed to several books. He has been working in the insurance industry ensuring content is accurate for consumers who are searching for the best policies and rates. He has also been featured on sites like UpJourney.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. He reviews content, ensuring that ex...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Oct 7, 2020

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Things to remember...

  • Totaling your car with no insurance means that you are responsible for your accident-related expenses
  • If the car accident involves another driver or someone else’s property, you could be sued
  • You may lose your driver’s license and get fined if you are caught driving without car insurance
  • If you total a financed car while uninsured, you’re going to be liable for all damages out-of-pocket, including your car loan

What do you do with a totaled car and no insurance? And what happens when you total a financed car without insurance?

Driving without insurance is illegal in most states. This means that you must have at least a state minimum insurance policy in order to drive legally or proof of financial responsibility, which you can get at your local DMV if you meet the requirements.

If you do not have insurance or proof of financial responsibility and get into a car accident, you may be responsible for paying 100 percent of your accident-related expenses. If you total a financed car without insurance, you will also have to pay off your car loan.

If your car’s been totaled with no insurance— or if you’re worried about this happening— you need to get coverage on your car. No matter what your situation, the best way to save money is to shop around. Enter your ZIP code above to get multiple quotes for insurers in your area.

A Single-Car Accident That Totals Your Car Without Insurance

In addition to severe financial losses, you could have your driver’s license suspended, be put in jail, and face other fines from the court system and your local DMV. In order to avoid massive financial consequences and other severe legal and civil penalties, you should purchase an affordable policy.

If you get into a car accident and total your car without insurance, the best-case scenario is that you only damaged your car and caused injury to yourself.

In this scenario, all you have to do is call the tow truck and/or an ambulance if you are severely hurt. Your car repairs and your medical bills are your responsibility.

However, you don’t have to pay for anyone else’s accident-related expenses because no other people or property were involved.

A Car Accident Without Insurance That Involves Another Car

If you get into a car accident without insurance and you did something to cause the accident, you are going to be the party responsible for paying the damages, and this is in addition to any penalties you may face for simply driving without insurance.

  • Stay at the scene of the accident.
  • Do not state that you have insurance when you don’t.
  • Wait for the police to take a report.

You should only leave the accident scene after everything has been completed.

What happens if you wreck a financed car without insurance?

What happens if you total a financed car without insurance? Unfortunately, you’ll have to pay back the balance of your loan out-of-pocket. There’s no way to get out of paying for your car, and you’ll still be out of a car.

You can see why it’s so important to have coverage. You’ll also likely be violating the terms of your loan if you don’t carry full coverage. If you caused the accident, you may even have to pay for any damages and medical bills that the occupants of the other car may have suffered.

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What happens if I total my financed car without insurance?

So, what happens when you total a car that’s being financed with no insurance?

It’s always bad to total your car with no insurance, but if it’s financed, things are worse. It’s a really scary prospect, and the consequences can be pretty bad.

If your car is totaled and you still owe on the loan, you’re going to owe whatever the balance you borrowed is.

If this happens while you’re uninsured, that means you have to pay the balance of the loan out-of-pocket.

Although circumstances vary at this point, some lenders may insist upon immediate payment in full. Others will help set up a payment plan, which you have to keep current or lose your license and risk it being reported to credit agencies. And you’ll still have to pay for another car to drive.

The Consumer Financial Protection Bureau reports that the lender may have its own losses covered, as insurers who suspect the person who financed a vehicle is uninsured can place force-placed insurance onto your loan. This is a very expensive type of insurance that only covers the lender and which gets tacked onto the loan which you’ll have to then pay for.

If a lender purchased force-placed insurance against you, you may become a high-risk driver, which will raise insurance rates in the future when you try to get your own policy.

What if your financed car is totaled and you’re not at fault? If that’s the case, the other insurance company might cover the value of the loan, something they will take from Kelley Blue Book or a similar pricing service. In these cases, you may need to take the insurer to small claims court if they value the vehicle too low.

The video below talks about some additional consequences you could face if you’re caught driving uninsured, which is illegal.

But, if you’re uninsured, that doesn’t mean you should count on the other person having coverage. The table below shows just how many people are driving around while uninsured, data collected by the Insurance Information Institute (III).

Uninsured Drivers by State (% and Rank)
StateUninsuredRank
Florida (3)26.70%1
Mississippi23.70%2
New Mexico20.80%3
Michigan20.30%4
Tennessee20%5
Alabama18.40%6
Washington17.40%7
Indiana16.70%8
Arkansas16.60%9
D.C.15.60%10
Alaska15.40%11
California15.20%12
Rhode Island15.20%13
New Jersey14.90%14
Wisconsin14.30%15
Texas14.10%16
Missouri14%17
Illinois13.70%18
Colorado13.30%19
Louisiana13%20
Oregon12.70%21
Ohio12.40%22
Maryland12.40%23
Arizona12%24
Georgia12%25
Kentucky11.50%26
Minnesota11.50%27
Delaware11.40%28
Nevada10.60%29
Hawaii10.60%30
Oklahoma10.50%31
West Virginia10.10%32
Montana9.90%33
Virginia9.90%34
New Hampshire9.90%35
Connecticut9.40%36
South Carolina9.40%37
Iowa8.70%38
Utah8.20%39
Idaho8.20%40
Wyoming7.80%41
South Dakota7.70%42
Pennsylvania7.60%43
Kansas7.20%44
North Dakota6.80%45
Nebraska6.80%46
Vermont6.80%47
North Carolina6.50%48
Massachusetts6.20%49
New York6.10%50
Maine4.50%51
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There are a lot of uninsured drivers on the roads. The III estimates one in every eight drivers in the U.S. is uninsured.

How does a total loss work on a financed vehicle?

After an automotive accident, a car can be considered a total loss if the cost of repair exceeds the actual value of the vehicle at the time.

Laws vary slightly, but the general rule is that, if a car will cost 75 to 80 percent of its value to repair, it will be totaled out. KansasMoney.gov states that if damage is at or above 75 percent of its value and is seven years old or less, it will be totaled out. Older vehicles vary. Though NOLO notes that most states set the total loss limit at 80 percent.

And if you own the vehicle, you have the option to keep it even after it is totaled out.

However, if you don’t have insurance coverage at the time, your vehicle will likely be taken away with no option, and any insurance money will go straight to your lender.

What happens if you total a financed car with insurance?

First off, totaling a car without insurance is a bit different and more financially crippling than totaling a financed car with insurance. Insurance issues with a totaled car are different if there’s a policy in force. Your auto insurance will cover whatever damages are covered under your policy. If you’re financing, you’re typically required to have full coverage until the loan is paid off, so the company would pay whatever your car is worth toward the total.

If your car has depreciated and is now worth less than the balance on the loan, GAP coverage will cover the difference.

The video below from Allstate discusses what GAP coverage helps with.

Wondering what to do if you total your car without gap insurance? If your car is totaled with no GAP insurance, you’ll have to pay the difference out-of-pocket.

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Hazards of Driving Without Insurance

Some drivers, due to not knowing the laws or financial hardship, opt to cancel their insurance coverage or let it lapse due to nonpayment. If you are one of these drivers, you could be in for a shock.

What are the consequences of not having insurance in your state?

Each state has their own penalties if you are caught driving without insurance.

If you are caught driving without insurance in Michigan, you could face jail time of up to 12 months and be forced to pay a fine between $200 and $500.

Your license may also be suspended for 30 days or until you provide your local DMV with proof that you have acquired an insurance policy.

What happens if you get into a car accident without insurance?

If you get into a car accident without insurance in Michigan, you cannot:

  • Sue for pain and suffering, even if you didn’t cause the accident.
  • Get reimbursement for the damages to your car or your personal injuries that occurred at the time of the accident.
  • Avoid being sued by the other driver or the other driver’s insurance company if you are the driver that caused the accident.

If you get into a car accident without insurance and are at fault, you’ll end up paying out-of-pocket.There are a lot of uninsured drivers on the roads.

Percentage of Uninsured Drivers by State
StateUninsuredRank
Florida26.70%1
Mississippi23.70%2
New Mexico20.80%3
Michigan20.30%4
Tennessee20%5
Alabama18.40%6
Washington17.40%7
Indiana16.70%8
Arkansas16.60%9
D.C.15.60%10
Alaska15.40%11
California15.20%12
Rhode Island15.20%13
New Jersey14.90%14
Wisconsin14.30%15
Texas14.10%16
Missouri14%17
Illinois13.70%18
Colorado13.30%19
Louisiana13%20
Oregon12.70%21
Ohio12.40%22
Maryland12.40%23
Arizona12%24
Georgia12%25
Kentucky11.50%26
Minnesota11.50%27
Delaware11.40%28
Nevada10.60%29
Hawaii10.60%30
Oklahoma10.50%31
West Virginia10.10%32
Montana9.90%33
Virginia9.90%34
New Hampshire9.90%35
Connecticut9.40%36
South Carolina9.40%37
Iowa8.70%38
Utah8.20%39
Idaho8.20%40
Wyoming7.80%41
South Dakota7.70%42
Pennsylvania7.60%43
Kansas7.20%44
North Dakota6.80%45
Nebraska6.80%46
Vermont6.80%47
North Carolina6.50%48
Massachusetts6.20%49
New York6.10%50
Maine4.50%51
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But, if you get into a car accident without insurance and are not at fault, you might end up getting a super lucky wake-up call, along with citations and fees for driving uninsured.

Car Accidents in No-Fault vs. Tort States

When it comes to car accidents and insurance, states are either “no-fault” or “tort/traditional”. If you live in a state with no-fault laws, each driver is expected to file a claim with his or her insurance company.

If the claim is approved, the driver’s insurance company pays for the car accident-related expenses.

If you live in a tort state, once your insurance company receives your claim, they investigate the accident to determine which driver caused the accident.

If you are determined to be the cause of the accident, your insurance company pays for the other driver’s expenses. If the other driver is determined to be the cause of the accident, the other driver’s auto insurance company pays for your expenses.

While this may sound simple, 10 states currently have pay to play rules. If you get into a car accident without insurance, you cannot claim damages because you do not pay for insurance.

To avoid these scenarios, you should find an affordable liability insurance policy by using a comparison tool.

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What Happens After a Car Accident That is Your Fault

Normally, after you leave the scene of an accident and get to a safe location, you would call your insurance company, but since you do not have insurance, you are simply forced to wait and figure out how you will pay for your car repairs and medical bills.

The other driver will file a claim with his or her insurance company. Since you don’t have insurance, the claim will be processed under the driver’s uninsured and underinsured motorists’ coverage.

However, this does not absolve you of financial responsibility.

Once the insurance company determines the other driver’s injuries and the necessary repairs to his or her vehicle, the insurance company can sue you for that amount.

This means that you will have to go to court or agree to a settlement. In both instances, you can probably work out a payment plan with the insurance company in order to pay off the accident-related debt.

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What to Do if You Don’t Have a Current Insurance Policy

If you do not have a current insurance policy it is in your best interest to locate a new policy and purchase it before you drive again.

Thankfully, this can be accomplished quickly with the use of an auto insurance comparison tool.

Once you enter your information, the program will find all the available policies for you so that you can quickly buy an auto insurance policy.

Avoid the risk of totaling your car without insurance and get free quotes from multiple insurers by entering your ZIP code below.

Frequently Asked Questions

We’ve got a few more FAQs below. Read on for more about what to do if your car is totaled.

#1 – Do you still have to make payments on a totaled car?

If you are financing a car after a total loss, you should continue to make payments until told otherwise, otherwise, these missed payments may impact your credit score negatively.

#2 – What do you do if your loan outlasts your vehicle?

What do you do when your car dies and you still owe money on it? Sometimes, your car may not last the whole term of the loan. If that’s the case, you have a few options.

You can pay off the loan before purchasing a new vehicle. If you don’t have that sort of money lying around, you might be able to roll the remainder into a new loan for another vehicle. You might also be able to turn in the tags and store the car until it’s paid off, but that assumes you can afford to keep paying these payments and get another vehicle to drive.

#3 – Do you still have to pay insurance if your car is totaled?

Once your vehicle is totaled, you probably will not be required to pay your auto insurance since the car is no longer driveable. But always communicate with your insurer to make sure that this is the right action.

If you do end up with a lapse in coverage, your insurance will go up. The table below shows how auto insurance rates increase after a lapse in coverage.

Six-Month Auto Insurance Rate Increases After Lapse in Coverage
CompaniesRates with No Coverage LapseRate After Coverage LapesRate Increase
Nationwide$651.19$736.5213.10%
Liberty Mutual$696.00$810.0016.38%
Geico$730.18$786.887.77%
Progressive$882.00$901.002.15%
Farmers$974.82$1090.811.90%
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As long as you keep in touch with your insurer, it shouldn’t become an issue.

#4 – Can you refinance a totaled car?

Most lenders probably won’t allow you to refinance a totaled car. And if you refinance your auto loan and then total your vehicle, you may have to pay extra. That’s because some loans come with a prepayment penalty, and you’ll have to pay extra to get out of the loan if your car is stolen or totaled.

#5 – Can you keep a car if it’s totaled?

If you decide you still want to keep your car after the insurer decides it’s totaled, they’ll still pay out your claim. But, they’ll deduct the value they could have gotten from a scrapyard.

#6 – What if you’re in a car accident with no license or insurance?

The penalties for driving without a license fall into one of two categories: willfully violations and correctable offenses.

A correctable offense can be fixed later by the presentation of evidence. An example of this would be if you just forgot to take your license with you that day. In that case, you can have the violation dismissed by the traffic court later by proving that you have it.

Willful violations, however, are different because they show you were knowingly driving on a revoked or suspended license. Penalties for this include getting a citation, paying fines, and even being arrested.

#7 – What happens if you get hit by someone without insurance?

There are a lot of uninsured drivers out there. If you happen to get hit by one, your coverage may cover you. If you have full coverage, you should be okay. This video from Allstate talks a little bit about uninsured motorist coverage.

Uninsured and underinsured coverage is important to have — and is required in some states — so that you won’t have to worry about paying out-of-pocket.

#8 – Can someone drive your car if they’re not on your insurance?

Most of the time, someone who borrows your car with permission and causes an accident will still be covered under your policy. However, if they’re an excluded driver, that will not be the case. You’ll want to double-check before allowing anyone else to get behind the wheel.

#9 – What if you’re in a car accident on private property with no insurance?

What can happen if you’re involved in an auto accident on private property while uninsured? In most cases, you should follow the same process as if it happened elsewhere. Make sure you file a police report.

If the accident occurred because of some negligence on the part of the owner of the property, they might be liable for damages.