What happens when you get in a car accident with no insurance?

Two men standing next to their cars after getting into an accident, talking about insuranceImage: Two men standing next to their cars after getting into an accident, talking about insurance

In a Nutshell

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Car insurance is mandatory in most U.S. states. If you’re in an accident without insurance, you could wind up in serious trouble.

If you drive, you need car insurance. A standard auto insurance policy will protect you financially if you’re in an accident, whether you’re at fault or not. Going without it is risky and, in many cases, illegal.

Is car insurance mandatory?

No matter where you live, to drive legally you must prove you can be financially responsible for any car accidents you might cause. In most states, you do this by having auto insurance.

Only Virginia and New Hampshire are exceptions. Drivers in New Hampshire must show documentation of enough assets to pay for damages and liability in lieu of carrying a policy, and drivers in Virginia must pay a $500 fee.

States that require car insurance generally have laws dictating the minimum levels of coverage your policy must have. This typically includes the following types of coverage:

  • Bodily injury liability — This type of insurance pays for costs that come from injuries or deaths in an accident you cause. Required coverage levels vary from state to state, but most fall between $15,000 and $50,000 for an injury to one person and between $30,000 and $100,000 for injuries to two or more people.
  • Property damage liability — This insurance pays to repair or replace the other vehicle if you cause an accident. The minimum coverage requirements differ, but most states require between $5,000 and $25,000 in coverage.
  • Uninsured motorist coverage — Some U.S. states also require uninsured motorist coverage, which helps to pay for your expenses if you’re in an accident with somebody who doesn’t have insurance. Coverage levels, in some states, are the same as liability coverage requirements.

It’s important to note that the two mandatory types of liability insurance do not include protection for your own vehicle or injuries you sustain. You’ll need to make sure your insurance includes collision coverage to handle that. It’s not legally mandatory, but if you finance your car, your lender may require you to carry full coverage to protect their investment.

Breaking your state’s car insurance laws can have serious consequences, even if you’re not involved in an accident. Penalties will differ from state to state but may include …

  • Suspension of your driver’s license or car registration
  • Impoundment of your car
  • Fines

Who pays after an accident?

Car accidents can be costly. In 2020, accidents that didn’t cause any injuries cost an average of $4,700 per vehicle, according to recent data from the National Safety Council. And if people are hurt in an accident, the cost of the wreck can jump much higher.

Who pays after an accident can vary depending on the insurance laws in your state.

No-fault states

In some states, each driver involved in an accident must file a claim with their insurance company, regardless of who caused the accident. These no-fault states typically require drivers to carry personal injury protection insurance to cover their medical bills if they’re hurt in an accident.

But even in these states, the at-fault driver is still responsible for property damage sustained in the accident. If the accident causes severe injuries, you may still be sued and made to pay damages.

‘No-pay, no-play’ states

In some states, drivers who don’t carry insurance won’t be fully compensated for any damage if they’re in an accident and not at fault. “No-pay, no-play” laws limit how much money uninsured drivers can receive after an accident.

What happens if I cause an accident without insurance?

If you’re found to be at fault in a car accident and you don’t have insurance, you might first of all face penalties like a suspended driver’s license or car registration.

You may also have to file an SR-22 certificate with your state, legally proving that you have the required insurance documentation. And it may be significantly more expensive to buy an insurance policy than before.

Then, you may be held responsible for the costs associated with the accident — both injuries and property damage.

What happens if I’m not at fault but don’t have insurance?

Even if you’re not at fault in the accident, you may still be cited for driving without insurance and forced to pay fines or have your license suspended. Sometimes, your insurance company can cover these costs for you and then seek reimbursement from the other driver’s insurance.

You may be able to file a third-party claim with the other driver’s insurance company or sue them for damages, but that can take time. If you live in a “no-pay, no-play” state, you may also be limited in how much money you can ultimately recover.

Finding low-cost car insurance

Simply put, driving without insurance is incredibly risky. Finding a low-cost auto insurance option is a much better bet than driving without any financial protection for yourself and others on the road.

And even if you don’t have a great driving record, nonstandard insurance companies can offer you a policy that can provide some protection for you — both from the legal consequences of driving without insurance and the financial consequences of an accident.

First, determine how much car insurance you need. Check with your department of motor vehicles to learn the legal requirements for car insurance in your state, but also consider the value of your car and financial assets you have and want to protect. An insurance agent or financial planner might be able to help you figure out the right levels of coverage for you.

Then shop around. Compare car insurance quotes to find the best rate for the insurance coverage you need. Make sure the coverage levels and deductibles are the same to make a fair comparison.

About the author: Warren Clarke is a writer whose work has been published by Edmunds.com and the New York Daily News. He enjoys providing readers with information that can make their lives happier and more expansive. Warren holds a Bac… Read more.