Do You Have to Have Car Insurance? Maybe Not
Posted March 8th, 2019 by Jason Metz
Here's a little secret about car insurance: You don't have to have car insurance in many states. Most states have an alternative to buying auto insurance, such as making a deposit with the state.
What states do have are "financial responsibility" laws. These essentially say that you must have a way to compensate others if you cause an accident. The alternatives to car insurance are typically:
- Posting a deposit or bond with the state.
- "Self-insuring," usually for owners of more than 25 vehicles, such as rental car companies.
Most people either don't know there's an alternative to auto insurance or find it more convenient to buy car insurance than give the state a big wad of money.
Self-insuring means that you choose not to buy auto insurance because you have the money to pay any judgments against you arising out of use of your vehicles. To do this, you generally must get a certificate of self-insurance from the state. The department that issues self-insurance certificates varies by state.
Which states do not require car insurance?
New Hampshire is the only state without a financial responsibility law. And even in New Hampshire you have to buy car insurance if you cause an accident.
Here's a look at states that don't require car insurance and the other options.
Alternatives to car insurance by state
| State | Bond or deposit instead? | Self-insurance instead? |
|---|---|---|
| Alabama | $50,000 | For owners of more than 25 vehicles |
| Alaska | $50,000 | For owners of more than 25 vehicles |
| Arizona | $40,000 | For owners of more than 10 vehicles |
| Arkansas | No | For owners of more than 25 vehicles |
| California | No | For owners of more than 25 vehicles |
| Colorado | $35,000 | For owners of more than 25 vehicles |
| Connecticut | No | For owners of more than 25 vehicles |
| Delaware | $40,000 | For owners of more than 15 vehicles |
| District of Columbia | No | For owners of more than 25 vehicles |
| Florida | No | Available to anyone with a net unencumbered worth of at least $40,000 and financially responsible for potential losses |
| Georgia | No | Available for owners of one or more vehicles |
| Hawaii | No | Available to any motor vehicle owner |
| Idaho | $50,000 of which $15,000 is for property damage up to a maximum of $120,000 for five or more vehicles | For owners of more than 25 vehicles |
| Illinois | No | For owners of more than 25 vehicles |
| Indiana | $50,000 in cash or securities that may legally be purchased by savings banks | No |
| Iowa | No | For owners of more than 25 vehicles |
| Kansas | No | For owners of more than 25 vehicles |
| Kentucky | No | For owners of more than 25 vehicles |
| Louisiana | $55,000 | For owners of more than 25 vehicles |
| Maine | No | Available to owners of one or more vehicles |
| Maryland | No | No |
| Massachusetts | $40,000 | No |
| Michigan | No | For owners of more than 25 vehicles |
| Minnesota | No | For owners of more than 24 vehicles |
| Mississippi | $75,000 | No |
| Missouri | $60,000 | No |
| Montana | $55,000 | For owners of more than 25 vehicles |
| Nebraska | $75,000 | For owners of more than 25 vehicles |
| Nevada | No | For owners of more than 10 vehicles |
| New Hampshire | n/a | n/a |
| New Jersey | No | For owners of more than 25 vehicles |
| New Mexico | $60,000 | Available to any vehicle owner |
| New York | $25,000 | For owners of more than 25 vehicles |
| North Carolina | $85,000 | For owners of more than 25 vehicles |
| North Dakota | No | Available to any vehicle owner |
| Ohio | $30,000 | For owners of more than 25 vehicles |
| Oklahoma | $75,000 | For owners of more than 25 vehicles |
| Oregon | No | For owners of more than 25 vehicles |
| Pennsylvania | $50,000 and $10,000 for each additional vehicle, maximum of $1,000,000 | Available to any vehicle owner |
| Rhode Island | $75,000 | For owners of more than 25 vehicles |
| South Carolina | $35,000 | For owners of more than 25 vehicles |
| South Dakota | $25,000 | For owners of more than 25 vehicles |
| Tennessee | $65,000 | For owners of more than 25 vehicles |
| Texas | $55,000 | For owners of more than 25 vehicles |
| Utah | $200,000 plus $100 for each motor vehicle up to 1,000 vehicles; $50 for every motor vehicle over 1,000 motor vehicles | For owners of more than 24 vehicles |
| Vermont | $115,000 | For owners of more than 15 vehicles |
| Virginia | $50,000 | For owners of more than 20 vehicles |
| Washington | $60,000 | For owners of more than 25 vehicles |
| West Virginia | No | For owners of more than 25 vehicles |
| Wisconsin | $60,000 | For owners of more than 25 vehicles |
| Wyoming | $200,000 plus $100 for every car | For owners of more than 25 vehicles |
| Sources: State DMVs, state statutes and the American Property Casualty Insurance Association | ||
Buying car insurance is the best route to driving legally for most people. If you're looking for cheap car insurance, some of the ways to get it are to:
- Compare quotes from multiple companies.
- Buy your auto and home insurance (or renters insurance) from the same company, for a bundling discount.
- Ask your insurance agent to review the available car insurance discounts to make sure you're getting all the price breaks you're entitled to.
FAQ
Can the police tell if you have no insurance?
Depending on your state, the police can tell if you have no insurance by using a simple technique: Asking you to show proof. In many states, you are required to carry physical proof of insurance and provide it to police upon request.
In certain states, auto insurers may be required to notify the motor vehicle department if your policy is cancelled. Police can often access state databases and an online verification (OLV) system to determine in real-time if you have insurance.
What happens if you get caught without insurance?
If you're caught driving without car insurance, depending on your state, you could face fines, driver's license suspension and even jail time.
What's the minimum car insurance you need?
The minimum car insurance you need to legally drive your car depends on your state's law. The requirements are typically written as a series of three numbers, such as 15/30/5. The first number is the bodily injury liability limit per person, the second number is bodily injury liability limit per accident and the third number is the property damage liability limit.
So 15/30/5 translates to $15,000 in bodily injury per person, $30,000 bodily injury per accident and $5,000 in property damage liability.
Remember, liability car insurance pays out to others. Liability doesn't pay for any of your own injuries or car damage.