Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

UPDATED: Mar 15, 2022

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Just the Basics

  • Car insurance is a mandatory purchase for all drivers in 49 of the 50 states
  • Liability, full coverage, and personal injury protection insurance address the significant financial expenses associated with car accidents
  • There are serious legal and financial consequences for driving without the minimum required insurance policies and limits

Although shopping for car insurance is a frustrating and often confusing task, you are legally required to have this financial protection in place before getting behind the wheel of your car. For 49 out of the 50 states in the country, you’re required by law to carry an insurance policy.

Not only can we help you find the right insurance for your situation, but we can also explain why you need car insurance. Being in a car accident is stressful in many ways, so the last thing you want is to worry about paying for injuries and damage. Read on to learn more about how car insurance protects you.

How Car Insurance Protects You

Car insurance is designed to make sure everyone is financially responsible for what happens when they are behind the wheel. You can be held liable for any injuries or damages that happen when you’re driving and have an accident, and mandatory coverage was created to make sure everyone can pay for those damages.

Rather than paying for these costs out of pocket, your insurance company protects you by kicking in to pay any bills you’re responsible for in an accident.

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When do you need car insurance and what coverage do you need?

Not only do insurance policies help with your financial responsibilities, but they also address the legal responsibilities you have to maintain adequate coverage. This can protect you from fines, a suspended or revoked license, and jail time.

Almost all U.S. states have minimum requirements for auto insurance (New Hampshire residents must provide proof of financial responsibility instead), but you can extend your protection by supplementing the mandatory policies with other coverage options.

Liability

This is mandatory coverage for most states, with minimum amounts established from state to state. Bodily injury liability helps with the expenses related to the injury or death of the other party when you are at fault for an accident. Property damage liability helps with damages done to third-party property caused by your driving. The lowest minimums across the country are around $10,000 per person for bodily injury and around $5,000 for property damage.

Comprehensive

Damages can occur from non-collision incidents as well. With comprehensive insurance, you’ll be covered for incidents like theft, vandalism, or falling objects. This coverage also helps with repairs to damage caused by animals, natural disasters, and weather conditions.

Collision

Collision insurance covers the damage to your vehicle from an accident where you’re at fault. It also covers you in the event of a hit-and-run, where there is no other driver to be held responsible. Collision coverage is generally purchased along with comprehensive to create a full coverage policy.

Full Coverage

This policy includes liability coverage as well as comprehensive and collision insurance. This isn’t mandated by state law but is often required by the lender who holds the lease or financing on your vehicle.

Personal Injury Protection

There are 16 states that require PIP insurance; for everyone else, it’s optional. This insurance assists with medical bills and lost wages if you or any passengers in your vehicle are injured during an accident. This coverage is sometimes termed no-fault insurance because it doesn’t matter who caused the accident for an individual to file the claim with their own insurance.

Uninsured or Underinsured Motorist

Though insurance is a requirement, you may get into an accident with a motorist who doesn’t carry insurance or who hasn’t taken out enough liability coverage to take care of your medical expenses. This protection could help resolve your costs in these situations. Some states require this coverage, while others leave it optional.

What is the cost of not having insurance?

Facing a car accident without insurance means assuming the financial costs of the incident from your personal resources. Adding up the costs for medical care, rehabilitation, lost wages, property damage and restorative services could lead to thousands of dollars. The National Safety Council estimates the average cost to be around $78,900 for a non-fatal accident, while an accident resulting in death costs around $1.5 million. Not only could you be responsible for damages to others if you are found at fault for an accident, but you still have to address your own damages or expenses incurred by the accident.

The average car insurance rates across the nation is $1,630 for a year of full coverage. This breaks down to around $136 a month and provides more than the minimum required for basic liability. To simply purchase the minimum required amounts, the average is closer to $480 for the year. Comparing the out-of-pocket costs for accidents without insurance and the costs for either minimum or full coverage makes it clear why car insurance is important for vehicle owners.

What are some of the other costs of not having car insurance?

Though the costs of paying for accident-related damages can be devastating, there are additional reasons why you need car insurance. Because car insurance is a mandatory purchase for the majority of drivers across the nation, there are legal consequences if you are caught driving without it. Car insurance laws in each state differ in terms of how uninsured drivers are treated. Those found guilty of driving without insurance could be charged with a misdemeanor and face various penalties. The most common penalties include the following:

  • Suspended vehicle registration and driver’s license
  • Fines that can reach upwards of $5,000
  • Mandatory community service
  • Jail time
  • Vehicle impoundment
  • Registration and license reinstatement fees

Many states have a progressive approach toward consequences, with the first offense often being a lesser consequence such as a fine and registration suspension. Repeat offenses often incur jail time and much higher fines. It is also more likely for a harsher penalty to be issued if an uninsured driver causes a collision.

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Why You Need Car Insurance: The Bottom Line

The consequences of driving without insurance are serious, but they can be avoided by simply purchasing the best car insurance for your budget. Driving without insurance comes with penalties and the risk of financial devastation, and it’s simply not worth it. You need car insurance to meet state requirements and to protect yourself in an acccident.

Get the car insurance you need to protect yourself by shopping around and comparing rates to find an affordable option.