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While the vast majority of drivers must comply with state minimum car insurance requirements, most states allow little-known alternatives to insurance, and one state requires neither insurance nor an alternative.
These alternatives are a form of self insurance, but before you start driving insurance-free, read the rules that apply where you live.
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State insurance departments often tell drivers they must get auto insurance. But dig into the regulations and you’ll find that’s not always quite true. In many cases, you can arrange self-insured auto insurance by depositing cash or posting a bond with the state in lieu of insurance.
Here’s a breakdown of states where you can deposit funds or post a bond in lieu of car insurance:
State
Bond/Deposit
Alabama
$50,000
Arizona
$40,000
California
$35,000
Colorado
$35,000
Delaware
$40,000
Idaho
$50,000
Indiana
$40,000
Iowa
$55,000
Louisiana
$55,000
Maine
$127,000
Maryland
$75,000*
Massachusetts
$10,000
Mississippi
$15,000
Missouri
$60,000
Montana
$55,000
Nebraska
$75,000
New Mexico
$60,000
New York
$25,000
North Carolina
$85,000
Ohio
$30,000
Oklahoma
$75,000
Rhode Island
$75,000
South Carolina
$35,000
South Dakota
$25,000**
Tennessee
$60,000
Texas
$55,000
Utah
$160,000
Vermont
$115,000
Virginia
$50,000
Washington
$60,000
Wisconsin
$60,000
Wyoming
$25,000
* In Maryland, drivers must also meet the state’s requirement for personal injury protection, unless waived, and uninsured motorist coverage.
** Or $30,000 in securities.
Source: Property Casualty Insurers Association of America, state insurance and motor vehicle codes.
Most states will also consider self-insurance plans, in which vehicle owners pay for accidents they or their employees cause. States approve these plans on a case-by-case basis and typically require them to provide as much coverage as regular insurance. You usually must own a fleet of at least 25 vehicles to self-insure, but 10 states allow self-insurance plans for those who own fewer vehicles: Alaska, Connecticut, Georgia, Hawaii, Indiana, Maryland, New Mexico, North Dakota, Pennsylvania and Vermont.
New Hampshire and Alaska: Going rogue
New Hampshire is the only state that doesn’t require residents to have insurance, or even prove they could cover their liability in an accident, according to the Insurance Information Institute and Property Casualty Insurers Association of America. But if you do cause an accident, the state will demand proof of insurance or an ability to pay for treatment of up to $50,000 in injuries and repair of up to $25,000 in property damage. If you can’t, you’ll face suspension of your license and registration. Drivers can meet the requirement, if they must, with a surety bond or by depositing money or securities with the state treasurer, or with alternate evidence that shows you have the ability to comply with state requirements.
The “Live Free or Die” state might also require you to prove financial responsibility for at least three years after being found at fault for an accident, driving while intoxicated, failing to stop and report an accident, vehicular homicide or assault, or a second ticket for speeding or driving recklessly.
Alaska exempts some residents — those who live in areas not connected by land to the state highway system or to a road with an average daily traffic volume greater than 499 vehicles — from car insurance requirements. The exemption currently includes residents of 294 places, including islands, towns and villages. However, these drivers do have to get car insurance if they have been cited for a serious traffic violation within the previous five years.
Should you drive without auto insurance?
Most of us pay more for insurance than we ever get back in claims. If that weren’t the case, insurance companies would go out of business. But that doesn’t mean it’s a good idea to drive uninsured. If you live in one of the above states and you’re considering going without coverage, consider these factors:
Do you have enough money for a bond? In every state except New Hampshire you need to put up quite a bit of cash in lieu of insurance.
Do you have better things to do with your money? Even if you have the money, locking it up in a bond or deposit just to avoid car insurance payments may not be the best use of it. You might be better off investing for retirement, for example.
Can you afford the risk? Causing just one accident with significant injuries or damage would ruin many people financially and is a big risk even if you can afford the loss.
Car insurance is the best option for almost anyone who drives. You may be able to save money if you compare auto insurance rates.
Aubrey Cohen is a former staff writer at NerdWallet, a personal finance website.
Although New Hampshire and Virginia are the only states with no auto insurance requirements, Florida and New Jersey are the other two that don't require bodily injury liability, which pays for the other party's injuries in the event of an accident that you caused.
Liability coverage is required in most US states as a legal requirement to drive a car. Liability insurance may help cover damages for injuries and property damage to others for which you become legally responsible resulting from a covered accident.
Car insurance is mandatory in almost every state. State minimums and coverage types vary, but nearly all states that mandate insurance require liability coverage for property damage and bodily injury.
Liability insurance, the key requirement of most states' auto insurance laws, offers financial protection to both the at-fault and not-at-fault parties in a car accident so that injuries and property damage can be covered, helping prevent costly lawsuits.
Any vehicle with a current Florida registration must:be insured with PIP and PDL insurance at the time of vehicle registration. have a minimum of $10,000 in PIP AND a minimum of $10,000 in PDL.
Each state sets its own rules for what information insurance companies can or can't use when pricing auto insurance. Things like your driving record, what car you drive, and other data about you as an individual help them determine how risky you are to insure.
Car insurance laws are set and enforced at the state level, and 49 of the 50 states in America require all drivers to carry an active car insurance policy. New Hampshire is the only state in which you are not legally required to have car insurance, as long as you can show proof of financial responsibility.
Car insurance is mandatory in 48 out of 50 states. In New Hampshire, you're not required to have car insurance as long as you can prove your financial responsibility to cover the injuries and property damages of other parties in a car accident that you're at fault for.
In every state — except for Virginia and New Hampshire — drivers are required to carry some form of auto insurance. If you get caught driving without insurance in state that requires it, you can be subject to large fines, the cancellation of your license or car registration and even jail time.
Car insurance in New Hampshire isn't required, but New Hampshire law requires you to show proof of financial responsibility if you're liable for someone else's injuries or damages. One way to prove financial responsibility is by getting car insurance. What it coversInjuries you cause to others in an accident.
Typically, the higher the deductible, the lower your premium. Increasing your deductible from $200 to $500 could reduce the cost of collision and comprehensive coverage by 15% to 30%, according to the Insurance Information Institute, while upping it to $1,000 could save you 40% or more.
Virginia and New Hampshire are the only two states that don't require car insurance coverage. In Virginia, an uninsured motor vehicle fee may be paid to the state, while in New Hampshire, vehicle owners have the option to post cash bonds or hold savings accounts to cover liability limits.
Virginia Code § 46.2-706 requires all Virginia registered motor vehicles to be insured by a liability policy issued through an insurance company licensed to do business in Virginia, and it must remain insured while registered, whether or not it is operated. Penalties are severe for violation of this requirement.
In Virginia, car insurance is required for all registered vehicles. According to Virginia Code § 46.2-706, every vehicle must have a liability policy from a licensed insurance company. The insurance must be maintained as long as the vehicle is registered, regardless of whether it is being driven.
If you are caught driving without car insurance in Virginia, you risk being penalized with a Class 3 misdemeanor, a suspension of your driver's license, vehicle registration, and license plates.
Texas law requires all drivers to have adequate car insurance. According to state law, Texas drivers need to have minimum insurance coverages of $30,000 per injured person, up to at least $60,000 per accident. Additionally, Texas drivers must have coverage for property damage of at least $25,000.
In order to register a car in Massachusetts, you must have automobile insurance. By law, you must purchase four coverages called Compulsory (or Mandatory) Coverages in, at least, minimum amounts required by law, and in higher amounts if you choose to do so.
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