Is it illegal to own a vehicle without insurance?
If you are asking is it illegal to own a vehicle without insurance, the answer is almost always yes. Most states require drivers to carry at least minimum liability insurance, which costs an average of $44/mo. However, there are a handful of states where car insurance is optional for drivers.
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Kristen Gryglik
Licensed Insurance Agent
Kristen is a licensed insurance agent working in the greater Boston area. She has over 20 years of experience counseling individuals and businesses on which insurance policies best fit their needs and budgets. She knows everyone has their own unique needs and circumstances, and she is passionate about counseling others on which policy is right for them. Licensed in Massachusetts, New Hampshire,...
Licensed Insurance Agent
UPDATED: Oct 10, 2024
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Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.
UPDATED: Oct 10, 2024
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident car insurance decisions. Comparison shopping should be easy. We are not affiliated with any one car insurance company and cannot guarantee quotes from any single company.
Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from top car companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.
On This Page
Wondering is it illegal to own a vehicle without insurance? You are legally required to have minimum liability car insurance in many states, or at the very least, a way to pay for damages, such as with assets. There are notable exemptions to the minimum car insurance requirements by state, but it’s generally illegal to drive without insurance.
Insurance laws vary from state to state, so be aware of your own state’s laws if you want to stay protected and legally in the right. If you want to shop around for car insurance in your state, use our free quote comparison tool to find the best rates for your vehicle.
- In almost all states, you need car insurance or at least a way to pay for damages
- There are exceptions, such as if you drive in New Hampshire or you don’t need to register your vehicle
- Uninsured drivers can face strict penalties if caught driving without insurance
Is it illegal to have a car without insurance?
Generally, yes. Car insurance is inherently different from other types of insurance in that it not only protects you but also the other party in the event of an accident.
Think about the difference between car insurance and home insurance and you’ll understand why the former is necessary. Home insurance applies to you and you alone if something happens. You’ll never have to pay someone else. Car insurance goes both ways, applying to both you and others. If you’re involved in a car accident, your or the other driver’s insurance company pays out.
Consider what’s on the line in a car accident claim if it’s your fault. In addition to property damage, you may be responsible for expensive medical bills. This could add up to tens of thousands of dollars, sometimes more. The financial cost to you could be devastating, and you might be unable to pay the damages for the other party. That’s why your car insurance company pays instead.
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When You Can Have a Car Without Insurance
There are several scenarios in which you don’t legally need car insurance. Two states, New Hampshire and Virginia, do not require car insurance. This means you would personally be responsible if an accident was your fault, and you may be legally liable for all expenses involved. In Virginia, there is a $500 annual fee for driving uninsured.
You don’t need insurance for a car that you don’t drive, such as if the vehicle is always kept in a garage and doesn’t require license plates or registration.
A car kept in storage doesn’t necessarily mean it’s never going to suffer damage, however. You might be the victim of vandalism or theft. Comprehensive car insurance is the best option for this case. Thus, you have the option of getting insurance even if the vehicle isn’t driven.
Read more:
- Can my car be impounded for not having insurance?
- How long can I drive my new car without insurance? [Expert Advice]
- Which states do not require car insurance?
Difference Between Mandatory Insurance Laws and Financial Responsibility Laws
Most states have one of two types of insurance laws in place. Mandatory insurance laws mean that the state requires you to buy insurance, whereas financial responsibility laws mean you must be able to pay for any damages as a consequence of an accident.
With the latter, as long as you have the resources to pay for damages, you are sufficiently covered. However, this means you may possibly have to pay for damages with assets such as your house or car. While this can be an alternative to paying car insurance rates, it is extremely risky to opt for this.
Penalties for Driving Without Car Insurance
If you’re caught driving without insurance, you can expect the law to penalize you. The penalties can come in several forms:
- Fines
- Points on your license
- Jail time
- License, registration, and/or plate suspension
- Court fees
- Impounding fees
In addition, a court may require you to file an SR-22 form, which would label you as a high-risk driver and could drastically increase your car insurance rates. You may also be unable to collect any damages if you don’t have car insurance, even if the accident wasn’t your fault.
Read more:
- Can I drive an uninsured car on my own insurance policy?
- Can you get your car out of impound without having insurance?
- How do you file for SR-22 insurance?
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Uninsured Motorist Coverage
This type of coverage protects you if you’re hit by an uninsured driver. There are two subtypes of uninsured motorist coverage: uninsured motorist bodily injury coverage and uninsured motorist property damage coverage.
UMBI takes care of things like lost wages and medical bills as a result of an injury sustained in a vehicle accident. UMPD covers your vehicle and sometimes your home.
Underinsured Motorist Coverage
Underinsured motorist coverage isn’t quite the same thing as uninsured motorist coverage. The former is for when the other driver is insured but doesn’t have a policy that is high enough to cover your damages. This coverage also has bodily injury and property damage subtypes.
Underinsured coverage can be useful if, for example, the other driver’s policy limit is $50,000 but your damages are $75,000. In this case, your insurance will cover the remaining $25,000.
States may require either uninsured or underinsured motorist coverage or both.
Cost of Uninsured Motorist Coverage
Uninsured motorist coverage typically costs about 5% of your yearly insurance rate. If your annual rate is $1,300 a year, this extra coverage will probably cost about $6 a month. However, this can vary depending on your age and driving experience, as well as by state.
Deductibles usually apply to uninsured motorist coverage, and you must be able to pay your car insurance deductible. If you can’t pay your deductible, your insurance company might waive it, or you’ll need to apply for a loan.
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What if I’m hit by an uninsured driver?
It depends on whether your state has no-fault or at-fault policies. In a no-fault state, your insurance company will pay for your damages if you’re hit by an uninsured driver. In an at-fault state, the party responsible for the accident must pay the damages. No-fault car insurance and personal injury protection are synonymous.
Most of the time, your insurance rates will not go up as a result of an accident that wasn’t your fault. In some states, it’s illegal for an insurance company to do this. However, this doesn’t apply to all states or all scenarios.
Case Studies: Understanding Car Insurance Requirements
Case Study 1: John’s Uninsured Accident
John lives in a state where car insurance is mandatory. Unfortunately, he decides to drive without insurance to save money. One day, John causes an accident, resulting in significant property damage and injuries to the other party. As a result, John is not only liable for the damages but also faces legal consequences for driving without insurance.
Case Study 2: Sarah’s Stolen Car
Sarah owns a car that she rarely drives. She keeps it stored in a garage and doesn’t require license plates or registration. While she believes she doesn’t need car insurance, Sarah’s vehicle gets stolen one night. Without insurance, Sarah is left to bear the full financial burden of the stolen car, including its recovery and potential repairs.
Case Study 3: Mark’s Inadequate Coverage
Mark, who opted for minimal car insurance coverage, finds himself in an accident caused by another driver with similar limited coverage. Unfortunately, the damages surpass the coverage limits of both policies, leaving Mark accountable for the remaining costs.
Final Thoughts on Whether You Need Car Insurance
Most of the time, the law requires you to have car insurance. If you don’t need to buy a policy outright, you at least need a way to pay for damages as a consequence of an accident, if not with money, then with assets.
However, there are exceptions, such as if you live in New Hampshire or your vehicle doesn’t legally need to be registered. Be aware of the legal requirements in your state.
If you need car insurance, you can use our free quote comparison tool to find the best rates on required car insurance in your state.
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Frequently Asked Questions
Is it illegal to own a vehicle without insurance?
In most cases, yes. Car insurance is usually required by law to protect both you and others in case of an accident.
When can you have a car without insurance?
You may not need insurance if you live in New Hampshire or if the car is not driven and doesn’t require registration.
What are the penalties for driving without insurance?
Penalties can include fines, license suspension, vehicle impoundment, and even imprisonment. Your insurance rates may also increase, and you may need to file an SR-22 form.
What is uninsured motorist coverage?
Uninsured motorist coverage protects you if you’re hit by a driver who doesn’t have insurance. It covers bodily injury and property damage.
Do insurance rates go up if I’m hit by an uninsured driver?
In most cases, your rates won’t increase if the accident wasn’t your fault.
Free Car Insurance Comparison
Enter your ZIP code below to view companies that have cheap car insurance rates.
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Kristen Gryglik
Licensed Insurance Agent
Kristen is a licensed insurance agent working in the greater Boston area. She has over 20 years of experience counseling individuals and businesses on which insurance policies best fit their needs and budgets. She knows everyone has their own unique needs and circumstances, and she is passionate about counseling others on which policy is right for them. Licensed in Massachusetts, New Hampshire,...
Licensed Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.