Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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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: Jul 14, 2021

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In a nutshell...

  • Most states have compulsory laws in place that say that all vehicle owners must carry at least some insurance
  • There are states that offer vehicle owners alternatives to buying auto insurance like placing a large cash deposit
  • It’s your legal liability to buy auto insurance on a registered vehicle if you’re registered as the legal owner
  • If you own a vehicle that doesn’t have active tags, you’re not required to comply with current auto insurance laws
  • If you’re caught driving an uninsured vehicle, you could face serious legal consequences that could cost a fortune

When you’re planning on purchasing a car, you have to consider what it truly costs to be a vehicle owner. You have to have money for a down payment, but the initial costs go beyond just that.

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If you’re buying a car outright, you’ll have to cover the final sales price, registration and title fees, and possibly even the cost to smog the car. If you’re financing, you’ll have to put down a sufficient deposit that will help you secure a loan.

No matter how you buy, you’ll always need money to cover the cost of insurance when you’re buying a car. Auto insurance is almost always considered mandatory.

While there are always exceptions to the rule, it usually costs less to buy insurance than it does to deal with the repercussions of being uninsured. Here’s what you need to know about owning cars without insurance.

Most States Have Mandatory Auto Insurance Laws


Auto insurance isn’t just something you appreciate when you need it, it’s something that you must have in many states.

A majority of states in the country have mandatory insurance laws in place that state that all cars on the road must be insured with a minimum amount of coverage.

The laws generally protect third-parties from suffering financial damage without having any way to collect from the liable driver.

While it’s uncommon, there are also states with first-party coverage requirements that makes carrying medical coverage for yourself and your family members mandatory. You should check to see what’s required in your state.

You can’t just place the burden of paying for auto insurance on someone else who’s willing to handle your business.

By law, if car insurance is compulsory, the car must be covered by a policy that’s written in the name of the vehicle’s legal owner. That means that the registered owner must be the named insured on their auto policy.

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What happens if the name on your policy doesn’t match?

You must buy at least a minimum amount of insurance from a provider that’s licensed in the state.

If you put the car on a policy that’s written under a friend or acquaintance’s name, you’re not complying with the law. Most motor vehicle agencies require the registration and insurance card to match.

If the names on each don’t match, you could have trouble verifying that you have insurance because most DMV’s in the country now use an electronic verification system to check the status of your insurance in real-time.

The state might even say that you’re not complying with the law even though you technically have an insured vehicle.

Alternatives Offered to Vehicle Owners


There are states that do offer residents alternative options for buying auto insurance. Usually, states that give vehicle owners the option to do something other than buying auto insurance to comply with the law has what’s called a financial responsibility law.

Some of the most common types of alternatives in states with FR laws include:

  • A cash deposit matching the minimum liability limit that is placed with the DMV or treasury
  • A certificate of self-insurance that’s issued by the DMV
  • A surety bond issued by a licensed carrier in the state

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Is it illegal to drive your car without insurance?

You should never drive a vehicle that you own without insurance unless you’ve already been able to show evidence of financial responsibility in another acceptable way.

If you put down a cash deposit with the DMV or you’ve been approved for a self-insurance certificate, you can drive. In any other circumstance, you must have insurance to legally drive.

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What states don’t have mandatory auto insurance laws?


There are states that have no mandatory insurance laws in place. Currently, in the United States, both New Hampshire and Virginia don’t require car insurance.

Even though you don’t have to have car insurance, you must brush up on your responsibilities before assuming you’re not at risk of being sued.

In New Hampshire, you’re held liable for up to $50,000 of damages to others. If you’re uninsured and you can’t pay for third-party damages, you can be sued and you can lose your license.

In Virginia, you don’t have to buy auto insurance but you do have to register your vehicle as an uninsured motorist and pay a $500 fee. You will still be held liable for any damages that you cause in your car.

Do you have to insure a vehicle you’re not driving?

If you’re not driving a car that’s titled in your name, it seems like a waste to have to pay auto insurance premiums. It’s impossible to injure someone else or damage someone else’s car in your own vehicle if it’s sitting.

Fortunately, there is a way to get away with canceling insurance or suspending coverage on the car.

The only way that you can legally remove coverage from a car with mandatory auto insurance laws is to file the car as a Planned Non-Op.

Once you do this, you don’t have to comply with insurance laws because you can’t drive the car publicly. Even though you don’t need the coverage, you should still consider keeping comprehensive for parked car protection and for extra credits on your policy.

The Consequences Are Expensive

The consequences of driving without insurance are very expensive. Most states require vehicle impounds and also license suspensions for insurance offenses. Some officers will simply issue citations that must be paid.

No matter what the penalty is, you can expect to pay out a pretty penny.

It’s not illegal to own a car without insurance if you take the proper steps. If you’re planning to drive your vehicle, you need to buy auto insurance before you get behind the wheel.

Get dozens of quotes right away by using our online comparison tool and you’ll be set.