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 14, 2021

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Here's what you need to know...

  • Auto insurance is a legal requirement in the United States, with the exception of New Hampshire and Washington D.C.
  • There are serious legal consequences for not having current car insurance, such as losing your driver’s license and hefty fines.
  • If you are at fault for an auto accident and do not have insurance, you are the one held financially responsible for all costs related to the accident, such as medical bills and car damages.
  • An online auto insurance premium comparison tool can help make auto insurance more affordable for you.

Car insurance can take a toll on the monthly budget of many. If you need to decrease the amount you pay for auto insurance premiums, try using an online insurance price comparison calculator. These types of online tools have helped thousands of people find auto insurance coverage that was more affordable. Start comparing car insurance rates now by using our FREE tool above!

While the direct results of paying our monthly bills are usually quite tangible, car insurance can be more of an elusive expense. We know that if we don’t have utilities are utilities will be turned off. We know if we don’t pay rent or mortgage we will lose our place to live. We know if we don’t care of the car payment we will lose our car. However, we may wonder why we have to have car insurance and what exactly we are paying for. To someone who has never been in a car accident and needed to use the benefits of their car insurance it may seem like they are throwing money down the drain each month when they pay their premiums.

Why Do You Need Car Insurance?

All drivers, with very few exceptions, need to have the protection of a car insurance policy. Car insurance is a necessity for several reasons. In most states it is a legal requirement that carries hefty penalties and fines if you do not keep her policy current. It also helps you to protect your finances and assets. Finally, if you have a leased vehicle or still owe on your vehicle loan having car insurance is a legal obligation to the leasing company or lender.

Purchasing and keeping current with your car insurance is not only a legal requirement, it also protects your fellow motorists on the road if an accident were to occur.

With the exception of drivers living in the state of New Hampshire or in Washington DC, you are legally required to have car insurance on your automobile. If you live in New Hampshire, however, if you do not have insurance you will be required to show the ability to pay for any damages that you may cause if an accident were to occur.

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Legal Consequences for Not Having Auto Insurance

While it can be tempting for those who are pinching pennies to skimp on auto insurance, driving a vehicle without insurance can be quite costly in many different areas of your life. It is risky business. Each state has their own laws regarding what penalties and consequences drivers will face if they do not have the proper auto insurance. Depending on your state if you do not have car insurance you can face such consequences as:

  • Legal suspension of your driver’s license
  • Revocation or suspension of the registration on your vehicle
  • A traffic violation for no insurance
  • Financial penalties up to and more than hundreds of dollars
  • Jail time
  • Court appearances
  • The potential to have to purchase SR-22 insurance, which can be more expensive and difficult to obtain

If you wish to have your license unsuspended and to get your car registration reinstated you will most likely be required to pay the fines and heavy fees that can even be up to $1,000 or more, depending on your state’s laws and regulations. If you decide to drive on a suspended license or without a current vehicle registration the consequences and fines will be even more serious. As each state has its own policies and laws, check with your own state to find out more.

Financial Responsibilities in an Accident

On top of any legal consequences you will face and signs that you will have to pay for not having a current car insurance policy, there are other natural consequences you may be faced with. If an accident occurs while you are not covered under insurance policy you can face even more financial obligations and even civil penalties.

When a car insurance policy is in place and an accident occurs, the policy will generally cover any medical expenses and expensive to replace or repair property in relation to the accident.

If you do not have auto insurance at the time of an accident, the financial obligation to pay medical expenses and repair or replace property, including vehicles, will be left solely up to you. The cost of medical bills in relation to a car accident, as well as the cost to repair or replace vehicles, can quickly add up and become financially out of reach for most people. However, that does not leave you in the clear. If you cannot cover these expenses for the other party, they can see you in the court of civil law. If they win in civil court they can potentially take your assets or anything of worth that you own to help pay for the expenses. They may also be able to garnish your wages and place liens on your home.

The risk of not having auto insurance is clearly not worth it. While paying auto insurance premiums each month or a couple times a year can be a downer, it is nothing compared to what you could face if you do not keep your auto policy current.

The Added Importance of Auto Insurance for Leased or Loaned Vehicles

If you are leasing your vehicle or still owe a balance on the loan for your vehicle, insurance coverage is even more important. If your car is to become damaged or needs to be replaced this not only affects you but it also affects the leasing or loan company. A loaned or leased car is still technically owned by the leasing or loan company. If you are in an accident and do not have auto insurance you will be responsible to your loan company or leasing company to pay for the repair or replacement of your vehicle. If you do not follow through with this you could face serious consequences, such as civil penalties and difficulty getting credit or another car in the future. You should check your loan or lease agreement to be sure that you have purchased the amounts and types of insurance required by your lender or leasing company.

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Make It Easier to Pay Your Premium

If you are someone that finds you simply forget to pay your auto insurance bill, there are several steps you can take to help ensure that this important bill gets paid on time, such as:

  • Paying your car insurance premium annually- The less frequently you need to pay this bill the less likely it is that you will forget to pay it. Check with your auto insurance company to find out if you can be billed and pay annually for this important legal requirement. If you can swing paying this annual bill all in one lump sum it is wise to do so, and may save you money and severe consequences in the long run.
  • Automatic payment options- Many car insurance companies give you the option of setting your payment up for an automatic payment plan. You can arrange to have your premium automatically withdrawn from your checking account or charged to your debit or credit card. This also keeps your life simple that means that you don’t have to remember to make your payment each month.

With some auto insurance companies and policies, you can even save a significant amount of money by paying your bill once per year, instead of each month, or with automatic monthly withdrawals. This can be an added bonus for people who need to decrease their car insurance premiums and need help remembering to pay their bill on time.

Not seeing the direct benefit of paying your bill can be frustrating at times, however, you can take heart when paying this bill, knowing that you are following the law, protecting your own financial assets and interests, and caring for other motorists that you are out on the road with.

Paying your car insurance premiums is much cheaper and easier than the alternative. Be sure to check out a price comparison tool when shopping for auto insurance, to be sure you are getting the best premiums available to you. Start comparing car insurance rates now by entering your zip code in our FREE tool below!