Do You Really Need Car Insurance?

You need car insurance in nearly every state, with most states requiring minimums of 25/50/25 to cover any potential damage and medical costs from an accident.

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Why do you need car insurance?

With even minor car accidents costing an average of $4,700 in car repairs according to the National Safety Council, car insurance is required to protect yourself and others after a car accident.

If you don’t have insurance, even a fender bender can cost thousands of dollars, which could wipe out any potential savings, force you to sell off your assets or even leave you open to a lawsuit.

Car insurance can protect you in many situations, including:

  • Car crash
  • Cracked/damaged windshield
  • Hitting an animal
  • Damage from a pothole
  • Air bag injury
  • Whiplash
  • Physical therapy from an accident

If you buy a car using a loan or a lease, lenders will often require you to buy comprehensive and collision coverage in addition to the state minimum liability coverage. This is to protect the lender’s investment, which covers any costs to fix your car if it's damaged in a car crash or other accident.

How much car insurance do I need in my state?

Car insurance minimums vary depending on your state. Most states require bodily injury and property damage liability coverage, which pay for bills for the other driver if you cause an accident.

Some states require additional types of coverage, such as uninsured motorist coverage and personal injury protection (PIP).

Car insurance liability requirements by state

Car insurance liability requirements
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How much car insurance do I need if I have a car loan?

Car lenders require anyone financing a new, used or leased car to get full coverage auto insurance. This includes comprehensive and collision coverage, along with higher-than-average limits for required coverage such as bodily injury liability and property damage liability.

Because car repairs and damage can be extremely costly, having insurance higher than the minimum requirements allows lenders to know that their investment — the car — is protected.

When should I buy car insurance?


You buy a new car

You're required to have car insurance before buying a car — but if you already have a policy and you're getting a different car, most insurance companies allow a grace period of 30 days to change coverage over to your new vehicle.

To get the cheapest rates on your car insurance, shop around and get free online quotes before you buy your car.

If you wait until you're at the car dealership to get a new policy, many dealers will try to sell you insurance that is often much more expensive than you can find shopping on your own.


You move to a new address

Even if you are not buying a car, some life events will mean you need a new car insurance policy, including moving away from the family home or inheriting a car through family or even a raffle.

If you have been on the family car insurance policy through high school and are now moving off to college, you can legally stay on the same insurance policy, as long as your primary address is still the family home.

But when you move to a new permanent address, you will need to get your own insurance policy. Insurance policies can only be shared by people living in the same household.

What happens if I get caught driving without insurance?

The charge for driving without insurance is normally a misdemeanor, which can mean anything from paying fees to having your driver's license suspended. But you can face much more serious punishments if you are caught multiple times or involved in an accident while uninsured.

Depending on your state, drivers can face different penalties for driving without insurance.

How do I get proof of insurance?

When you sign up for car insurance, your insurance company can mail you a physical proof of insurance card for you to keep in your car. However, most states allow drivers to show digital proof of insurance if they're stopped by the police or at the DMV.

Most major insurance companies have a mobile app that you can download to your phone or tablet and will keep a copy of your insurance card for easy access. Or you can save a copy directly to your phone.

Frequently asked questions

Is collision and comprehensive car insurance required?

Your state won't require you to have collision and comprehensive coverage. However, most lenders will require that you buy collision and comprehensive insurance when you take out a loan or lease for a new or used car.

What states don’t require car insurance?

New Hampshire is the only state that does not require car insurance. But most states let drivers pay an uninsured motorist fee instead or deposit a bond or cash with the DMV as proof of funds to pay for an accident instead of getting car insurance.

Is it illegal to not have car insurance?

Yes, in all states except for New Hampshire, it is illegal to not have car insurance when driving on public roads. If you're caught driving uninsured, you might have to pay a fine or your license might be suspended until you can show proof that you have car insurance.

Do I need insurance to drive another person’s car?

No, if you are driving another person’s car with their permission and their policy covers non-named drivers, you don’t have to have insurance yourself.

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