These States Do Not Require Auto Insurance

A frank conversation with insurance expert consumer advocate Doug Heller

By Jim Probasco Full Bio LinkedIn Twitter Jim Probasco has 30+ years of experience writing for online, print, radio, and television media, including PBS. His expertise includes government programs and policy, retirement planning, insurance, family finance, home ownership and loans. He has a bachelor's from Ohio University and Master's from Wright State University in music education. Learn about our editorial policies Updated February 15, 2022

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Showing Proof of Financial Responsibility

Drivers who opt out of auto insurance need to provide proof of financial responsibility like other drivers. Instead of carrying insurance cards, they have to carry copies of their bonds and show them to the police if they are pulled over for traffic violations.

The real trouble comes when a driver is in a car accident, or even just pulled over, and can’t provide proof of car insurance or financial responsibility. There’s a good chance the driver’s license and registration will be suspended. Getting them reinstated will require you to obtain proof of insurance or financial responsibility. In some states, repeat offenders are required to have insurance coverage for a stated length of time, such as three years.

How much is enough?

While the state minimums are relatively low, you must also ask yourself the question of whether or not it is enough for you. If you were to have an accident where someone was crippled for life, your cost of liability could rise to over $300,000 in total damages if they were to take you to court.

If someone is killed or immobilized, as a result, you could be sued for the rest by the plaintiff if the accident was deemed your fault.

For that reason, many agents recommend minimums more than $100,000 per person and $300,000 per accident.

Shop around and ask an agent how much coverage is a realistic amount for you to have on your auto insurance policy. With auto insurance, one must always weigh the risk of accident and loss with the amount of the premium per month.

Compare insurance policies to get the best coverage at the best rate. Start by entering your zip code into our FREE comparison tool!

References:

If I have the minimum required limits, is it necessary to purchase higher limits?

It is not legally required to have higher limits if you are already carrying the minimum amount. However, depending on the individual, many will choose higher limits to decrease the amount for which they are liable.

Keep in mind that if you are in an accident, once your limits have been reached, you are personally responsible for the amount over and above that.

If there is a lot of property and/or bodily damage, the cost may be a lot higher than the limits you have on your policy, which means you will owe a lot out of pocket.

This is a good reason why you may consider raising the limits on your policy, so you will not owe as much, if any at all.

Pros And Cons Of Not Having Car Insurance

Though it may seem like states where car insurance is not mandatory save drivers money, one accident can balance out the costs of monthly premiums.

How much do you have to make to not have car insurance? Though there is no specific salary threshold, forgoing car insurance typically only makes sense for someone with a large savings. You must be able to prove that you can cover the costs of medical payments and property damages both for yourself and the other party in certain situations.

Pro

Con

No administrative efforts

Very high costs if you cause an accident

Save money over time if you are not in an accident

Difficult to travel between states with differing insurance laws

Avoid changing car insurance rates or unexpected costs

Risk of losing license and registration if unable to pay for damages

Fee (in Virginia) that does not go toward accident costs

Difficult to travel between states with differing insurance laws

 

States With No Car Insurance Requirement

There are just two states that don't require car insurance: New Hampshire and Virginia.

Car insurance is not mandatory in New Hampshire, but residents are still responsible for damages resulting from a car accident: up to $50,000 for liability and $25,000 for property damage. Drivers who cannot pay for damages can expect to have their licenses and registrations suspended.

Virginia residents can skip getting car insurance if they pay the state $500 per year. However, that does not provide accident coverage of any kind. The driver who caused the accident is still liable.

8. All States Car Insurance

SafeAuto provides state minimum car insurance. Furthermore, although there are states in which we don’t offer car insurance in directly, we can still help you (24)

Apr 9, 2021 — Which States Have the Cheapest Car Insurance? Different states require different levels of insurance coverage, with a couple not requiring it at all. If you don’t qualify for USAA, which is limited to current and former military (25)

Jun 27, 2013 — Auto liability insurance is mandatory in 49 states and the District of Columbia. New Hampshire, the only state that does not require auto liability (26)

States that don’t require car insurance

New Hampshire is the only state that doesn’t mandate car insurance. However, drivers who choose not to buy car insurance must prove they have sufficient funds to meet the state’s financial responsibility requirements (PDF) in the event they cause an accident. Failure to meet the state’s requirements can result in the suspension of their license and registration.

In Virginia, car insurance is required, but drivers are allowed to opt out of the state’s insurance requirements if they pay a $500 uninsured motorist fee each year. This fee doesn’t provide coverage — at-fault drivers are still responsible for damages.

Reevaluate Both Coverage and Insurance Provider

Investopedia: You touched on the notion of reevaluating coverage. How often and when should you do this reevaluation?

Heller: I think there are two types of reevaluation. One is the coverage on your car. The other is the insurer you use. The auto insurance market is a strange one. It competes through advertising rather than through price. So, we see Geico and Progressive and State Farm and all these companies duking it out with funny characters and athletes, telling us how great they are. Their prices are wildly different, depending on the market and depending on you and the ZIP code you live in. I’d say, every two or three years shop your insurance policy.

When you shop for a company, you also need to reevaluate your coverage. It’s not just whether your car’s value has declined and you no longer need collision coverage. Your own personal financial situation may have changed, and you may want to expand or decrease your liability coverage. Simply put, if you lost your job, lost your assets, and have spent down your savings, you don’t have that much in assets to protect and reducing liability coverage to save money.

Similarly, if your assets have increased, you may want to expand your liability coverage. Ask yourself if the coverage you have is enough now that you have more wealth to protect.

5. What are states that dont require drivers to have car insurance

2 states do not mandate auto insurance, New Hampshire and Virginia. But all states, including those 2 have a Financial Responsibility Law, that says that if you 17 answers  ·  0 votes: There are two states that don’t require auto insurance. Well… sort of. don’t. require. (14)

Auto insurance exists to protect your assets — If you’ve financed your car, your lender may require the minimum limits mandated by most states.(15)

State, Insurance required (1), Minimum liability limits (2). AL, BI & PD Liab, 25/50/25. AK, BI & PD Liab, 50/100/25. AZ, BI & PD Liab, 15/30/10. AR, BI & PD Liab, (16)

Wisconsin

While there is no mandatory law that requires its residents purchase auto insurance, citizens have to be able to prove their ability to pay for damages in the event of an auto accident if they are the ones at fault.

This can be done in a number of ways:

  • The motorist can carry liability insurance on the vehicle
  • They can put a cash deposit of $60,000 or more down with the Wisconsin Department of Transportation
  • They can file a bond with the Wisconsin Department of Transportation as well

If a motorist happens to get stopped in Wisconsin by a police officer without insurance, an independent investigation will be led by the Wisconsin Department of Transportation and the case will be put under review.

Minimum Requirements In Other States

You’re likely to see similar breakdowns of liability auto insurance like the ones we mentioned for the states where car insurance is not mandatory. All other states require minimums for liability. This covers costs when you are at fault for an accident.

Other states may also require:

  • Personal injury protection (PIP): Covers costs for your own medical bills and lost wages if you live in a no-fault state
  • MedPay: Covers medical costs beyond what your health insurance covers
  • Uninsured/underinsured Motorist (UM/UIM): Covers you when you are in an accident with another driver who does not carry liability insurance or does not carry enough insurance

Requirements vary depending on whether the state is in a traditional fault or no-fault state. No-fault states require each party to seek medical coverage from their own car insurance companies.

So, which state has the lowest auto insurance? In 2016, the Insurance Information Institute (III) found Idaho to be the least expensive state with an average annual expenditure of $599.77 for drivers.

Use the tool below or call (844) 246-8209 to collect and compare car insurance quotes from providers available in your state:

 

What options do I have in these states?

In Virginia, you also have the option to purchase a bond or deposit cash with the state instead of purchasing car insurance. If you do this, you are essentially proving financial stability to your state. In fact, you can do this with a number of other states as well. All of the following states that allow bonds or cash deposits in lieu of car insurance include:

  • Alabama
  • Arizona
  • California
  • Colorado
  • Delaware
  • Idaho
  • Indiana
  • Iowa
  • Louisiana
  • Maine
  • Maryland
  • Massachusetts
  • Mississippi
  • Missouri
  • Montana
  • Nebraska
  • New Mexico
  • New York
  • North Carolina
  • Ohio
  • Oklahoma
  • Rhode Island
  • South Carolina
  • South Dakota
  • Tennessee
  • Texas
  • Utah
  • Vermont
  • Virginia
  • Washington

Each state has its own bond or cash deposit requirement, but all are quite significant. In Virginia it’s $50,000, and in many states it’s considerably more (Utah, for example, requires a bond or cash deposit of $160,000).

The bond or cash deposit is used in the event that you cause an accident. Any amount paid to an injured party must be immediately repaid with interest back to the state.

There are obviously many differences between bonds and car insurance. One of the more interesting ones, however, is that the bond applies to you and not your car. This means you can drive any car you want with a bond and not worry about whether or not you are covered.

You Don’t Have To Solve This on Your Own – Get a Lawyer’s Help

Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.

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