Is It Illegal to Drive Without Insurance?

Whether you’re preparing to drive a newly purchased car off the lot or you’re looking for ways to save a few bucks, you may be wondering, do I even need car insurance?

In most cases, the answer is yes.

It’s illegal to drive without insurance in all but two states: Virginia and parts of Alaska. 

But without insurance, you’d still be on the hook to pay for medical bills, repairs and more if you get in an accident. That’s why it’s often easier (and financially smarter) to get car insurance. But how much insurance you need will depend largely on where you live and your tolerance for risk. 

What’s the least amount of car insurance I need?

Every state has its own requirements for what kind of car insurance residents should have and how much of it they should carry. 

Nearly every state requires drivers to have some kind of liability insurance. Liability car insurance pays for others’ medical costs, lost wages and damage you cause in a traffic-related accident. It won’t pay for your own medical or car repair costs.

Depending on where you live, you may also have to pay for the following:

• Uninsured/underinsured motorist coverage: Pays for you and your passengers’ medical costs and car repairs when you’re hit by a driver with minimal or no car insurance.

• Personal injury protection coverage, or PIP: Also known as “no-fault insurance,” PIP pays for you and your passengers’ medical expenses, wages lost, funeral costs and more, regardless of who is at fault.

• Medical payments coverage, or MedPay: This also reimburses you and your passengers for medical expenses regardless of fault.

Not sure what your state requirements are? Check out NerdWallet’s minimum car insurance requirements by state for a full breakdown. Most insurance quotes you get online or over the phone will automatically factor in any state-mandated minimums.

Should I get more than just the bare minimum?

Paying for car insurance might feel like you’re throwing money away. This is especially true if you’ve never been in an accident.

But misfortune can strike at any time. While cars are becoming safer to drive, fatalities from car-related accidents are on the rise, according to the most recent data from the National Highway Traffic Safety Administration ^[0]

Most state minimum requirements aren’t enough to cover all expenses from major car accidents, which means you’ll be left paying the remaining balance if you’re at fault. 

For example, let’s say you live in New Jersey and have the minimum amount of property damage liability insurance required, $5,000. If you cause an accident with another driver and it costs $15,000 to repair their vehicle, you’re responsible for coming up with the remaining $10,000 on your own. And let’s not forget about your own car’s repairs.

Take note: If you leased or financed your vehicle, your lender likely requires you to have collision and comprehensive insurance on top of any state-mandated minimums. These coverage types pay for repairs or replacement of your own vehicle in case of an event outside your control.

» MORE: Get free car insurance quotes

Cover your net worth

Because you’re legally responsible for any accidents you cause while driving, you should get at least enough liability insurance to cover your net worth in the event that you’re sued. 

You can calculate your net worth by subtracting your total debt (mortgage, credit card balances and loans) from the value of all your assets (house, cars, cash in the bank and investment accounts).

If your net worth is low, having just your state’s mandated minimum car insurance requirements may be enough. But take note, most states don’t require you to purchase car insurance that reimburses you for your own medical or car expenses if you’re found at fault after an accident or experience some other mishap outside your control.

» MORE: How much car insurance do you really need?

What happens if I drive without insurance?

The penalties for driving an uninsured vehicle vary by state and the number of previous offenses. 

If you’re caught behind the wheel without insurance, prepare to face any of the following: 

• Fines as high as $5,000.

• Impoundment.

• Jail time.

• Suspended driver's license.

• Suspended car registration.

• Insurance rate hikes.

Where is it legal to drive without insurance?

If you live in one of the following states and meet the requirements, you can drive without insurance:

• Virginia: pay a yearly $500 fee to the Virginia Department of Motor Vehicles.

• Alaska: live in a remote area, as designated by Alaska’s Department of Administration.

If you don’t live in Virginia or the Alaskan wilderness, it may still be possible to drive without insurance if you can prove “financial responsibility” by submitting a bond, certificate of deposit or other cash deposit with your state. The dollar amount required varies; Florida requires a bond or cash deposit of $30,000 while Nebraska accepts a bond or certificate of deposit of $75,000. New Hampshire also requires a large sum of money as proof of financial responsibility, but only after you’re found at-fault following an accident.

Take note: In these cases, you’ll have to own your vehicle outright, since nearly every lender requires full coverage insurance.

Purchasing car insurance is the most common and straightforward way to prove financial responsibility to your state. That’s because it’s often cheaper (and easier) to simply pay a monthly insurance premium than cough up a large lump sum of cash or put your entire savings at risk.