What happens if you are in an accident but don’t have insurance?

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You’ve heard the story a million times before -one month or two, another payment for auto insurance. The thought comes to mind when you apply the stamp on the envelope: “What could occur should you let your automobile insurance coverage run out and ended up in an accident?

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It’s a question one out of seven drivers in the United States ought to ask themselves. According to a report from 2011 from the Insurance Research Council, 13.8 percent of drivers across the nation are not insured [source: Insurance Research CouncilInsurance Research Council.

Let’s first discuss what is the definition of not having insurance. A typical insurance policy for autos may include six kinds of insurance that can be used in various situations:

  1. Liability for bodily injury covers injuries that you cause other motorists and passengers as a the result of an accident.
  2. Damage to property liability is the coverage for repairs to others building, vehicles and fences as well as other property you damage in an accident.
  3. Collision compensates you for the damages that your vehicle has suffered, regardless of whether the collision was caused by you.
  4. Protection for personal injuries protects you from injuries the person you (the driver) and passengers in your vehicle.
  5. Comprehensive covers damage to your vehicle due to accidents that are not collisions including vandalism and natural disasters.
  6. Uninsured or underinsured motorist insurance will cover injuries and damage to your vehicle in the event that you are hit by a driver who is hit-and-run or a driver who is not insured or who is not insured sufficient insurance to cover the cost in the event of an accident.

When we speak of uninsured drivers, we’re talking about the two kinds of insurance. In February 2012, all states, with the exception of New Hampshire requires drivers to carry certain amounts of liability insurance to cover damages to property and injuries resulting from accidents they’ve caused [source: Insurance Information Institute[source: Insurance Information Institute]. (New Hampshire is one of the states with financial responsibility laws which require drivers who don’t have insurance to cover the cost of accidents that they are responsible for.) Some states require additional types of insurance before you are able to legally drive.

What will happen in the event that you don’t possess the appropriate insurance protection? Find out more here.

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The Consequences of Driving Uninsured

The penalties for driving without insurance differ between states. The majority of states require drivers to keep proof of insurance with them in all instances. 

Even if you’re not any kind of accident being found to be without insurance for your vehicle could result in fines up to $5,000, a suspension of your license, or even prison time (source: Insurance Information Institute(III). 

The positive side is that if you’re driving a vehicle owned by someone else with their permission and the driver has insurance, then you’ll most likely be insured in the case of an accident and in turn, vice versa (source: Farmers Insurance GroupFarmers Insurance Group.

Let’s say that you were driving by yourselfin your car totally uninsured when you were in an accident. If you did not cause the incident to occur (meaning that you’re not at-fault and at-fault”) when an insurance-insured driver struck you, you may still receive funds from the driver at-fault’s insurance company. 

If an uninsured motorist hits you however it is likely that you’ll have be able to pursue the motorist to recover damages. But, at the very least, 20 states have either proposed or implemented laws that restrict uninsured motorists’ legal recourse or prohibit them from lawsuits for non-economic damages such as the pain and loss of enjoyment (source: Insurance Information Institute(III).

If you’re found at-fault for the crash, passengers of the car you struck could be compensated by going after any of your possessions, based on the state that you live within. This could include your savings, or a percentage of your earnings from all your future pay checks or perhaps even the home you live in. 

In addition, you’ll be unable to purchase auto insurance again without being a part of an allocated risk pool which is a group of drivers whose serious violations are preventing them from purchasing insurance by themselves, and so the state makes connections with insurance companies who are charged high-priced costs.

“Most people realize that the potential liabilities of a major auto accident are something you can’t necessarily save for,” claims Michael Barry of the Insurance Information Institute [source: Barry]. Thus, while rescinding your insurance on your vehicle may appear to be a great method to save money, eventually it’s going cost you.

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