What Happens If You Don't Have Car Insurance? - Forbes

Nearly one in eight drivers do not have car insurance, according to a 2021 report from 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’ll also face insurance consequences. And if you cause a car accident that results in property damage or injuries when you’re driving without car insurance, the financial fallout can be devastating.

Every state has some form of “financial responsibility” law, meaning you must have a way to pay if you or someone driving your car causes an accident. One less-than-practical way to satisfy financial responsibility is to fork over a bond with the state that can run upwards of $50,000. But the easiest and most affordable way to satisfy financial responsibility is to buy car insurance.

Every state requires a minimum amount of liability car insurance (even New Hampshire and Virginia under certain conditions). And if you get caught driving without car insurance, chances are you are going to feel some financial pain.

Fines, Fees and the Slammer

Driving without insurance can land you in legal hot water. Here are some of the consequences you could face:

• Fines. If you get caught driving without car insurance, at the very least, you can expect a fine that can run anywhere from $100 to $1,500, depending on your state.
• License suspension. In some states, your license will be suspended and may not be reinstated until you get car insurance. In other states, the suspension can be more harsh. For example, if you don’t have car insurance and cause an accident in New York, you could lose your license for up to a year.
• Vehicle registration suspension or revocation. Driving without car insurance could mean losing your vehicle registration. For example, in Massachusetts your vehicle registration will be suspended indefinitely until you provide proof of insurance.
• Vehicle impoundment. In some states, such as California, your vehicle could be impounded if you get caught driving without insurance.
• Fees. If your license is suspended, registration revoked or your car is impounded, you will have to pay fees to resolve those problems.
• Jail time. Yes, driving without insurance can land you in jail. Most states won’t impose jail time for 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 does not have no-fault insurance, you could spend up to one year behind bars.

If you don’t learn your lesson the first time around, the legal consequences can get more severe. Second and subsequent offenses will typically result in stiffer penalties, including steep fines and an increased likelihood of facing jail time.

Examples of Legal Consequences for Driving Without Car Insurance (First Offense)

Higher Insurance Rates and Big Bills

Driving without car insurance can cause you legal problems and it’s also going to hit your wallet hard. Here are a few insurance consequences you might face:

• Higher auto insurance rates. If you drive without insurance, you’ll have what’s called a “coverage gap.” Insurers see a coverage gap as a higher risk to insure, which means you’ll be paying higher rates.
• Car repair bills. If you cause a car accident without insurance, you won’t have coverage for car repair bills for your own car or the other driver’s car, which means you could be on the hook to pay for major expenses, especially if the accident results in a totaled car. And if you damage someone else’s property, like a fence, you’ll be paying for that, too.
• Medical expenses. If you cause an accident that results in injuries, you could be held liable for the medical bills. The average cost for a bodily injury claim in 2017 was $20,453, according to the National Association of Insurance Commissioners’ most recent report. If you don’t have the cash to pay up, you could be sued, putting your assets, savings and home at risk.

Related: What exactly can be taken from you in a lawsuit?

How Much Will My Insurance Go Up 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 rate differences for those without a coverage gap and those who were caught driving uninsured.

How Do Police Know if a Car is Uninsured?

If you get involved in a car accident or get pulled over by the police, it doesn’t take a seasoned detective to find out if you lack car insurance. Here a few ways the police know if a car is uninsured:

• You don’t 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 for the use of cameras mounted on police cars, road signs and traffic lights. For example, Oklahoma’s 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 officer asks for your insurance ID card. Cops don’t necessarily need to rely on technology. They can use this old school method: ask you for proof of insurance. This is typically a paper or digital document stored on a mobile app that has your information along with your insurance policy number and the effective dates.

How to Get Car Insurance

The legal and financial consequences for driving without car insurance are not worth the risk. Here’s how to find a car insurance policy that fits your coverage needs and budget:

• Don’t rely on minimum requirements. While driving without car insurance can lead to financial disaster, so can buying inadequate coverage. Your state’s minimum insurance may fall short if you cause an accident with multiple injuries, meaning you’ll have to cover some major expenses. And the minimum requirements won’t cover your car repair bills because states don’t require collision insurance.
• Protect yourself from other drivers without insurance. If someone without insurance crashes into you, you’ll want coverage for medical expenses. Uninsured motorist coverage 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 is making you hesitant about buying insurance, it’s time to comparison shop. The cost for the same coverage will vary significantly among insurance companies, with some charging much more than others. Once you know the amount of coverage you need, compare auto insurance quotes from at least three companies to find the most affordable one. For example, we found that average rates differed by $1,230 among the 10 best cheap car insurance companies we surveyed for a driver caught without insurance.
• Ask for discounts. You can also trim your rate by asking about auto insurance discounts. Common ones include bundling your auto insurance with home or renters 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 get SR-22 insurance. An SR-22 isn’t insurance. It’s a form filed by your insurer with your state that says you have car liability insurance requirements. In some states, the form is called an SR-44 or a “certificate of financial responsibility.”

If you already have car insurance, your insurer can file a document with your state. If you need to buy car insurance, you will have to let your insurer know about 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 file an SR-22 even if you don’t own a car to restore your driving privileges. A non-owners car insurance policy can meet this requirement and so you can get the SR-22.