What happens if there is no insurance and you are involved in an accident?

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You’re familiar with the routine: another month, another payment on your auto insurance. As you close the envelope, you suddenly think: “What if my auto policy was cancelled and I got into an accident?”

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This is a question that every seven drivers should be asking themselves. A 2011 report from the Insurance Research Council found that 13.8 percent of drivers are uninsured.

Let’s first discuss what it means not to have insurance. Six types of coverage might be included in an auto insurance policy that covers different situations.

  1. Injuries to the bodily are injuries that you cause other drivers or passengers in an accident.
  2. Property Damage Liability Covers repairs to other vehicles, buildings and fences that were damaged in an accident.
  3. Collision covers you for any damages to your vehicle regardless of fault.
  4. Personal Injury Protection Covers the costs of injuries to yourself (the driver) as well as the passengers in the car.
  5. Comprehensive protects your vehicle from other accidents, such as vandalism and natural disasters.
  6. Coverage for uninsured or underinsured motorists protects your vehicle from injuries and damages if it is hit by a hit and run driver, driver without insurance, and driver who lacks enough insurance to cover the accident costs.

We are referring to the first two types insurance when we refer to an “uninsured driver”. Every state, except New Hampshire, requires drivers to have certain amounts of insurance to cover injuries and property damage caused by accidents.

[source: Insurance Information Institute]. New Hampshire has financial responsibility laws which require drivers who don’t have insurance to pay for injuries and property damage. You may need additional coverage in many states before you are legally allowed to drive.

What happens if you don’t have the right insurance? 

Driving without insurance: The consequences

Uninsured driving can have different consequences depending on where you live. Many states require that drivers have proof of insurance at all time. 

Even if you’re not involved in an accident, being caught without insurance could result in a fine of up to $5,000 and a suspension of your license.

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If you are driving a car owned by someone else, and they have permission to do so, you will likely be covered in case of an accident. [source: Farmers Insurance Group].

Let’s suppose you were driving your car alone, uninsured, when you were in an accident. You can still get money from the insurance company of the at-fault driver if you did not cause the accident (meaning that you are not ”at fault”). 

Uninsured drivers can hit you and you will most likely sue them for compensation. At least 20 states have passed or implemented laws to limit the legal rights of uninsured drivers or bar them from suing for noneconomic damages such as pain and suffering [source Insurance Information Institute].

You can be held responsible for any assets that are not yours. This depends on where you live. These assets can include your savings and a portion from your future earnings.

You could even be able to claim your home. You’ll also have trouble buying auto insurance again if you don’t join an assigned risk pool.

This is a group of drivers whose criminal records have rendered them unable to buy insurance on their own. The state then connects them with agents who charge high premiums.

According to Michael Barry, of the Insurance Information Institute, “Most people understand that the potential liabilities of an auto accident are something you cannot necessarily save for.

” Although it may seem easy to save money by removing your car insurance, you will eventually end up paying more.

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