What Actually Happens if You Don't Buy Car Insurance?

Car insurance prices are spiking, and drivers may be wondering what would happen if they simply skipped coverage to try to to save money.

Premiums are up more than 20% in the past year, and experts predict car insurance prices will increase further in 2024. As a result, the number of Americans driving without car insurance is also on the rise, according to J.D. Power.

"The overall trend over the last two years is for more Americans to drive uninsured as premium increases are bumping up against strained household budgets," says Stephen Crewdson, a senior director of insurance intelligence group at J.D. Power.

To put it bluntly, it's a horrible idea to go without car insurance. Auto repairs and medical bills can be extremely expensive if you get in an accident without insurance, which makes forgoing coverage ill-advised. Driving an uninsured vehicle is also usually illegal, and you could find yourself in serious legal and financial trouble if you get pulled over or end up in an accident.

Offenders usually have to pay a fine of $1,000 or more. Depending on the state you live in, your license or registration could be suspended if you're caught operating a car without insurance, and vehicle impoundment is even possible. You may also have trouble getting affordable auto insurance in the future because you'll have a coverage gap in your record.

"Insurance is something that you buy for the unexpected," says Todd Greenbaum, president of Input 1, a provider of digital payment and billing services to the insurance industry. "There's no good reason to go without it. I understand that people financially struggle, but the better option always is to find a way to buy insurance within your budget as opposed to foregoing it entirely."

What happens if you don’t have car insurance

A significant portion of American drivers are uninsured. The number of households that own a vehicle and report not having insurance was 6.2% in January, which is an increase from 5.3% in the second half of 2022, according to J.D. Power.

People who drive without insurance could experience some of the following consequences:

Expect to get hit with a fines

In all but a few states, auto insurance is required by law at minimum liability levels. Fines can exceed $1,000 if you're found in violation of these laws.

"First and foremost, there would be the legal consequences," Greenbaum says. "If you don't have auto insurance, you're going to be breaking the law, and that can lead to hefty fines."

Legal trouble can turn more serious

Authorities can charge you with legal offenses if an officer finds that you can't provide insurance upon their request after a speeding incident or a car accident.

Stuart Winchester, CEO of the insurance shopping startup Marble, says your vehicle could be impounded, which is common in states including California.

"That's definitely on the table," he says. "You would have to pay for the towing and pay for the fees to have it impounded and then released."

Driver's license or registration could be suspended

There's also a good chance that your license or registration (and possibly both) will be suspended if you're found violating state insurance requirements.

You likely won't be able to resolve the situation until you have proof of insurance, and in some states, you may not be able to get your license back for a year.

"Think about it: If you need to drive to go to work, or you're a parent and you need to drive and pick up your child, or take your child to school — I mean, these are significant impairments to your ability to live your daily life," Greenbaum says.

In serious cases with repeat offenders, driving without a license can even lead to jail time.

Getting car insurance in the future will be more expensive

If you have a lapse of car insurance, you could face consequences even if you don't get caught. With a coverage gap in your insurance history, you'll probably have to pay higher premium when you try to get coverage again in the future.

Also, drivers who have their licenses suspended usually need to file SR-22 forms with their state verifying they have minimum liability coverage. If you need an SR-22 for auto insurance, you'll probably have to pay a higher car insurance premium.

Bills can add up after an accident

If you don't have car insurance and get in an accident, you could quickly be responsible for tens of thousands of dollars of bills for car repair or replacement, property damage and medical costs.

Even though the cost of car insurance has been rising faster than pretty much any other spending category, most people will find that maintaining insurance is well worth it.

What to do if you can't afford your car insurance

Instead of driving without insurance, Americans struggling financially are much better off strategizing ways to lower car insurance premiums — often by reducing their coverage. Make sure you at least have the minimum amount of liability insurance required by your state, if that's all you can afford.

Raising your deductible to a high level like $2,000 is another way to get a cheaper car insurance premium if you're in a pinch. You'll pay more out-of-pocket when you need to use your insurance, but you could always adjust the policy again if your financial situation improves.

Later in the year, the pace of car insurance premium increases is expected to finally slow down, according to J.D. Power.

"With other inflationary impacts relenting, one would hope more Americans find they can afford adequate auto insurance coverage as 2024 plays out," J.D. Power's Crewdson says.

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