A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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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, mainly in the insuranc...

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Reviewed by Leslie Kasperowicz
Farmers Insurance CSR 4 Years

UPDATED: Oct 26, 2021

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Here's what you need to know...

  • Auto insurance is mandatory in almost every state because of state-mandated legislation
  • In states where auto insurance isn’t mandatory, drivers must comply with financial responsibility laws where they must prove they can cover damages
  • It’s typical for state officials to only require drivers to carry a minimum amount of Bodily Injury and Property Damage coverage
  • Failure to comply with the law can lead to several financial and even criminal penalties
  • Judges are buckling down on uninsured driver penalties and the consequences can affect those convicted for years

When you’re licensed to legally drive a vehicle, you’re agreeing that you’ll obey all of the rules of the road. Not only does this mean that you’ll drive defensively to avoid accidents, it also means you’ll stay insured just in case an accident happens. Even with mandatory auto insurance laws in place in most states, data collected by the Insurance Information Institute in 2014 shows that 12.6 percent of drivers nationwide don’t have insurance. Start comparing car insurance rates now by using our FREE tool above!

Before you’re tempted to join this large pool of uninsured drivers, it’s important that you learn what could potentially happen if you don’t obey state insurance laws. Not only does driving without insurance come with hefty fines, it’s also considered a criminal misdemeanor in most states where insurance is mandatory. Read this guide to the direct and indirect consequences of failing to buy auto insurance and see why compliance is so important.

Do all states require auto insurance?

In states with mandatory auto insurance or compulsory insurance laws, all vehicle owners must buy a minimum amount of coverage to satisfy the state. It’s most common for states with these mandatory laws to require residents to carry only third-party liability coverage that will pay for the damages they cause to others. In other states, however, there are financial responsibility laws that give vehicle owners different options to comply with the law.

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What is a financial responsibility law?

States that don’t explicitly require their drivers to carry insurance have what’s referred to as financial responsibility laws. Instead of making insurance compulsory, these states will give their residents other options to prove that they have the assets or finances to pay for any damage they might cause while operating a vehicle.

In states with financial responsibility laws, it’s still common for drivers to purchase liability insurance to comply. This is because not everyone has assets and most people who don’t want to lose them because of a crash. Some of the alternatives to insurance include:

  • Post a cash bond in a specified amount with the state treasurer
  • Post a surety bond
  • Put up property as collateral

What limits are you required to carry?

Every state has their own coverage and limit requirements. It’s important that you know the state-mandated requirements and how they protect you before shopping for coverage. Here’s a breakdown on how some of the most popular required coverage options work:

  • Bodily Injury:

Pays to cover third-party medical expenses when you crash into a vehicle or pedestrian and are responsible for someone’s injuries.

  • Property Damage:

Pays for the repairs or the reasonable replacement of third-party property when you’re the liable party for the accident.

  • Uninsured Motorist:

Some states now require drivers to carry Uninsured Motorist protection which acts like liability insurance but pays for your medical expenses when you’re involved in an accident with an uninsured driver.

  • Medical Payments/Personal Injury Protection:

Some states will also require a minimum amount of medical cover that protects you and your passengers. Medical Payments is available in states with fault-based insurance systems and Personal Injury Protection is available in no-fault states where insurers pay for their own client’s medical bills regardless of fault.

What are the consequences of driving without insurance?

Now that you know more about insurance requirements, it’s time to learn why you need to comply with the law. The penalties for driving without insurance or any other proof of financial responsibility can be steep. Since so many uninsured drivers are traveling down roadways nationwide, judges across the nation are buckling down to make public roads a safer place.

Many automatically assume that the penalties are financial, but the immediate consequences of being without auto insurance are more than monetary. Here are some of the various penalties that can be assessed to people who choose not to abide by insurance codes:

  • Traffic violation with fines ranging from $100 to $1000
  • Mandatory court appearance
  • Criminal misdemeanor if convicted
  • Suspension of driver license or revocation
  • Community service at the discretion of the judge
  • Suspension of registration
  • Vehicle impoundment
  • SR-22 requirement for 36 month period
  • Imprisonment after multiple offenses

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What are the indirect consequences for driving uninsured?

Not only are there penalties assessed by the courts and the Department of Motor Vehicles, there are indirect consequences that can haunt you for years to come. You might worry about having an uninsured loss, but you can be accident-free and still have to face the music.

Driving uninsured is often a misdemeanor, and a conviction on your record could affect your ability to land a job or pass a strict background check.

In addition to blemishes on your record, it’s possible that you could lose your vehicle entirely if it’s impounded for too long. After all, impound fees and fines add up, and if the costs are higher than the value of the car you might be liable to just leave the car in the lot. Having you car could affect your ability to get to and from work and send your life in a major tailspin.

Do you have to be cited to get caught driving without insurance?

Did you know that you don’t have to get caught red-handed to face penalties for driving uninsured? Many people assume that if they drive as careful as possible and they don’t get pulled over, they don’t have to worry about getting caught. In actuality, auto insurance is now electronically verified in most states. This gives both state officials and law enforcement officials the power to check the status of a policy at any given time.

If you don’t have insurance and this information has persuaded you to get covered, it’s time to price shop. After all of the fines and penalties you face for being uninsured, it’s fair to say that driving without insurance is actually more expensive than buying a policy. Use an online rate comparison tool and find the lowest premiums so that you can get that peace of mind you need to drive safe. Start comparing car insurance rates now by entering your zip code in our FREE tool below!