Driving without car insurance is risky. While many agree that car insurance should be compulsory, others argue that they should be allowed to choose if they want insurance.
Home and other types of insurance are not compulsory, so why are we forced to buy car insurance?
Why is Auto Insurance Compulsory?
In the United States, mandatory car insurance was first introduced in Massachusetts and Connecticut in 1925. Today all states, except New Hampshire and Virginia, have compulsory insurance laws.
Car accidents are inevitable, and lawmakers made auto insurance mandatory to protect all road users. They cite the following reasons for compulsory car insurance.
1- Driving is a high-risk activity. There are many factors that can lead to a car crash, such as mechanical failure, distracted driving, driving under the influence, the weather, animals darting across roads, construction and other road hazards.
Having car insurance ensures that drivers have the financial means to cover vehicle damage, especially if the other party is underinsured or uninsured. It also protects other road users like pedestrians and passengers who may sustain injuries.
2- Covers medical costs from injuries. There are very few health insurance companies that cover injuries from car accidents. In most cases, medical costs are covered by auto insurance.
3- Provides liability cover. This covers vehicle damage and injuries sustained by the other party when you are at fault.
4- Covers property damage. You’re covered for damage to property should you crash into a structure like a building, house, or wall.
5- Avoids lawsuits. America is the fifth most litigious country in the world. Having car insurance helps avert costly lawsuits.
What is the Minimum Car Insurance you Must Have?
Each state requires a minimum liability coverage. This protects you in the event that you are at fault in an accident and are liable for the other driver’s damages and medical expenses. To cover damage to your vehicle, you will need comprehensive coverage .
Each state sets their own minimum liability coverage. Typically, it amounts to the following:
- Bodily injury liability per person: $25,000
- Bodily injury liability per accident: $50,000
- Property damage liability per accident: $25,000
- The amounts vary from state to state, so it’s best to check the insurance requirements in your state.. Some states, like Minnesota and Illinois, also require coverage for uninsured/underinsured motorists.
In no-fault states, each person is liable for their own damages and medical expenses. In these states, Personal Injury Protection (PIP) insurance, also called “no-fault insurance”, is required.
What Happens if You don’t have Car Insurance?
While you’re paying a car loan, banks and financial institutions require insurance. But what happens should you decide to cancel your insurance after the loan is repaid.
Auto insurance can be expensive. For those who are unemployed or have a limited income, keeping up with car insurance payments can be a struggle. Rather than drop your auto insurance, try to find cheaper car insurance.
Going uninsured can backfire on you in the future. Here’s what to consider:
Can you Rely on the Other Motorist’s Insurance?
No. What if the other driver is also uninsured?
In addition, some states are becoming tougher on uninsured drivers. They follow a “no-pay, no-play” law that prevents uninsured drivers from receiving compensation from insured drivers. There are currently 11 no pay, no play states:
- Alaska
- California
- Indiana
- Iowa
- Kansas
- Louisiana
- Michigan
- Missouri
- New Jersey
- North Dakota
- Oregon
Can you Pay for Damages Out of Pocket?
If you choose to drive without insurance, can you pay for damages out of pocket? Even in New Hampshire and Virginia, the only two remaining states that don’t mandate car insurance, drivers are still liable to cover the other driver’s vehicle damages, injuries or property damage. Uninsured drivers in Virginia are also required to pay the state $500 per year.
Can you Cover Medical Costs Out of Pocket?
Medical costs can run into thousands very quickly, especially if you or the occupants of the other vehicle are hospitalized. Do you have savings set aside for this eventuality?
If not, there are four ways you can deal with this if you’re uninsured.
- Not get treated for your injury if it’s minor. If the other party is injured, however, you’ll still be liable for their medical treatment.
- Receive treatment and pay off the medical bill. Should you not pay the bill, it can affect your credit rating.
- Find a medical doctor that treats car injuries. You can use Accident Doctor to locate a doctor.
- Find a health insurance company that covers car accident injuries or start a health savings account.
Driving without car insurance may save money in the short term, but can lead to exorbitant expenses should you be involved in an accident. Remember, auto insurance isn’t just to cover your risk. It’s also meant to protect other drivers and vehicle occupants. For that reason, states are likely to keep it compulsory for the foreseeable future.