The Price of Getting Caught Driving With No Car Insurance

Even though laws vary from state to state, all drivers must carry at least some type of car insurance. While many people are trying to cut costs because of financial hardships, going without car insurance in hopes that you won’t be caught can be a very costly mistake. Even an accidental lapse in insurance because you forgot or couldn’t afford to pay the bill can cost much more in the forms of fines and penalties for a lapse in coverage, and may raise future insurance rates.

Minimum Standards

Most states require at least a minimum amount of liability coverage to pay for vehicle damages and injuries to the other party if a driver causes a wreck. This liability insurance covers the cost of medical expenses and property damage to other persons in case of a vehicle accident, but it usually does not cover the driver’s own losses. In case of even a minor accident, the police will check to see that all drivers involved are covered by insurance (or, in a very few states, a surety bond or self-insurance policy as a substitute). Police can also request proof of car insurance at vehicle checkpoints.

Proof of Insurance Requirements

Lenders require proof of insurance on financed cars. Often, lender requirements are higher than the states’ minimum liability coverage requirements. The lender will likely require comprehensive and collision coverage to protect the value of their investment in the vehicle in case it goes into repossession.

If the insurance policy lapses for any reason, the lender can force coverage by obtaining a policy on their own and charging the borrower for the cost. These policies are typically much more expensive than a regular insurance policy and they protect only the bank’s interest, not the interests of the driver. Forced coverage does not provide any liability insurance. If the lender forces coverage on your vehicle, the best thing to do is purchase a standard insurance policy as soon as possible and show the lender proof of coverage.

What if an Accident Happens?

If you are in an accident while driving without insurance, you can be liable for all the other party’s medical expenses. You will also be responsible for paying the costs to repair or replace the damaged vehicle. In addition, you may be charged with violating state motor vehicle laws, resulting in fines, court-ordered community service, or suspension of driving privileges.

Fines for driving without insurance can range from $500 to upwards of $5,000 depending on the state. In states with a punitive point system, 3 points or more may be added to a driver’s record for failing to have insurance. Some states even impose jail time of up to a year for driving with no insurance coverage.

Because car insurance companies run background and driving record checks on applicants, and since driving without a license is a violation of motor vehicle laws, which can add “points” to a driver’s record, being found guilty of driving without insurance can make it harder to obtain affordable car insurance in the future. Lapses in coverage may raise motor vehicle insurance premiums considerably or even disqualify a driver from obtaining a policy.

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