Do you really need to pay the hefty annual costs required to insure your car, even if your driving record is spotless?
To legally drive your or another person’s car in most states, yes, you do need car insurance. But because state laws and even insurance policies vary, here’s what you should know about keeping your car properly insured.
How does car insurance work?
Car insurance covers your liability for injuries and damages that result from a car accident. Protection can span from coverage for your car alone to add-ons that extend to other damage caused by accidents — even vandalism and driveway dings.
In this way, car insurance functions like any other insurance: You pay into an insurance policy, typically through monthly payments called insurance premiums. And by knowing your insurance policy terms, you know that if the worst case happens, you’re covered by your policy up to a predetermined or adjustable amount before additional money comes out of your pocket.
For a more comprehensive look at car insurance, including policy types and what you can expect to get for your money, read our guide to car insurance.
Why does the law require me to have car insurance?
You won’t find a federal law that requires car insurance. Rather, it’s at the state level that mandates at least some level of car insurance for drivers.
In most cases, you’re required to carry at least liability insurance, rather than a comprehensive policy that includes liability and collision. Liability insurance is nearly always required because it protects other drivers and pedestrians in an accident, not necessarily your own life and property.
But it doesn’t mean that insurance doesn’t benefit your needs: Any damage to your own vehicle is also covered, protecting you from the high repair and medical bills that can result from an accident.
Extended policies also cover other accident damages related to fire, severe weather, runaway grocery carts or other situations beyond your control.
What do laws specifically say about car insurance?
Laws and penalties vary by state, but nearly all states have legislation in place that makes it illegal to drive without car insurance.
States like Arizona and Alabama allow you to forgo your typical coverage by depositing money into a state fund or bond that’s used as collateral to cover damages resulting from an accident. But these deposits can be as high as $50,000 — often higher than what you’d pay for a typical car insurance policy.
If you’re in an accident and don’t have a valid car insurance policy, you face fees and legal consequences that can range from the suspension of your license to stiff fees and even jail time.
Most states are more lenient with first-timers, often resulting in a fine and a ticket. A few even allow you to avoid the worst penalties by providing proof of car insurance within a specified time.
But the majority of states take a heavy hand with uninsured drivers that can mean a suspended license and hefty fines. More severe penalties include suspending your vehicle registration — often for months — and jail time for repeat offenses.
Where can I find more information about car insurance laws in my state?
Most insurance providers can provide you with specific insurance laws for your state of residence. For a quick breakdown of liability insurance requirements by state, start with our guide to minimum insurance requirements.