Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...

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UPDATED: Sep 24, 2021

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Owning a car can be much more expensive than you might initially think before you are licensed. As you are planning for that day where you take your driver license test, you focus on how much it will cost you to buy a vehicle outright, pay a down payments, make your monthly loan payments, pay tax and titling fees, fuel up, and keep the vehicle maintained. All of these costs add up, but you are forgetting an unavoidable cost that many overlook as they are calculating the true cost of ownership– car insurance. Start comparing car insurance rates now by using our FREE tool below!

To own a vehicle you must be a financially responsible person who can drive responsibly and also pay for damages if you do unintentionally cause damage to people or property. While there are ways around buying insurance in some states, a most common way to comply with any type of financial responsibility laws is to buy coverage with a licensed insurance carrier who can do business where you reside. While state laws vary, insurance coverage is not optional for most people. Read on and find out more about the law and what may happen if you choose to hit the road uninsured.

Why are vehicle owners required to purchase car insurance?

You might wonder why it is against the law to drive without insurance. At first glance, it appears as if insurance is a financial product that protects your assets and your property. While this is true to a certain extent, the auto coverage that is required by law is actually to designed to protect those who may suffer financial loss because of your actions.

The state will typically only mandate that you carry coverage to pay for the property damage or for third-party medical bills.

This is because the state has no other way to guarantee that you have the money or the assets to pay for claims if you cause an accident while you are operating the vehicle that you own. Some states may go a step further and require drivers to carry Uninsured Motorist protection. If this is a requirement, it is more than likely in place to help you pay for your own medical bills when you live in a state with a high rate of uninsured motorists.

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The Difference Between Car Insurance Requirements in Tort and No-Fault States

The auto insurance requirements vary from state to state, but the requirements are also dependent upon the type of insurance system that the state operates under. There are currently two types of insurance systems: no-fault and tort. Tort-based systems are the most common in the United States and use fault to determine which insurer will ultimately pay for the damages when a claim is filed.Currently 38 states have a fault-based system where a victim’s medical expenses, loss of wages and other forms of compensation like pain and suffering is paid by the at-fault party’s insurer.

The remaining 12 states operate under a no-fault system. In no-fault states, the person who suffers damages will make a claim for their expenses under their own policy. They cannot seek compensation for medical expenses or other damages from the third-party unless there is a stipulation that allows this.

Coverage Required in States with Tort Systems

All states that have a tort-based insurance law will either explicitly require you buy a level of liability coverage or give you alternatives to prove you are financially responsible. The actual limits that are required will vary by state, but here are common requirements:

  • Bodily Injury Liability: Pays for third-party medical bills and other related expenses. May also pay for pain and suffering settlements if you are taken to court.
  • Property Damage Liability: Pays for the cost to repair real property, including vehicles, that are not owned by the named insured or members of the household. The limit is a per accident and not a per car limit.
  • Uninsured Motorist: (optional in some states) Pays for your medical costs and other related expenses if the at-fault party was not insured or did not have enough liability coverage to pay for all of the bills.

Coverage Required in No-fault States

If you are moving to a no-fault state, the coverage requirements may be new to you. In no-fault states, you must carry Personal Injury Protection to pay for your own medical expenses and other expenses that can be incurred after a loss. Here is a breakdown of the requirements:

  • Personal Injury Protection: (PIP) Pays for a limited and reasonable amount of qualified medical injuries and also for lost wages. Some PIP coverage will pay for rehabilitation costs, transportation costs and funeral expenses as well.
  • Property Damage Liability: Many states will require that you have property damage liability to help pay to repair a car when you are negligent for damage. While many states use the no-fault laws as far as injuries are concerned, they will use fault to determine who will pay for repair costs. This will also kick in if you are driving out of state.
  • Bodily Injury Liability: It is not out of the ordinary for a no-fault state to still require you to buy a minimal amount of Bodily Injury cover. This is especially important if you are in a loss with someone from out of state who does not have their own PIP.

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Dangers of Driving Without Insurance

The biggest danger of driving without insurance is that you can suffer a loss and have no financial help to pay for the medical bills or repairs. If you are taken to court, this could result in wage garnishments and other judgements that you did not even expect. In addition to putting your financial health at-risk, you are also putting your freedom and your right to driving at-risk. Some of the consequences if you drive without insurance include:

As you can see, it is too risky to drive without insurance. If you do not currently have coverage, you need to price the costs immediately and then choose the best plan. You do not have to be pulled over to pay the penalties for being uninsured. This is why you need to move as quick as possible to comparison shop. Use an online tool from your own home or office to get the process started quickly. Start comparing car insurance rates now by entering your zip code in our FREE tool below! Enter your information and then choose the value-priced auto insurance quote.