In most states, it is a requirement to carry auto insurance. However even with this law, many drivers do not have coverage at all. In the states that do not require auto insurance, many drivers think they are doing the smart thing by saving some money. The truth is you are asking for trouble if you don’t carry auto insurance, regardless if your state requires it or not. Below are the reasons why.
Loss of Driving Privilege
In the case of driving without insurance in a state that requires it, insurance companies and departments of motor vehicles are working together. They are comparing vehicle registration with auto insurance records and are catching those driving without coverage.
What happens if they catch you? Some states are taking away your driver’s license, while others are taking your license plate, and still others are not allowing you to re-register your car the following year without first proving that you have coverage. Therefore, you may want to think twice before driving without coverage, otherwise you are going to have to find another way to get to work and to run errands.
Many states now limit the ability to sue other drivers when you are in an accident if you don’t carry auto insurance. Even if the accident was the other drivers fault (and they have insurance), you will not be able to sue the other driver (or their insurance company) for lost wages or pain and suffering that you are dealing with.
So, if you do get into an accident and are out of work for 4 months recovering, you are out of luck. And if you have nagging pain or injuries that require medication or doctor visits, again, you won’t be collecting much if anything from the other party. You are going to have to cover the costs yourself.
High Out of Pocket Costs
Let’s say you get into an accident and neither one of you has insurance. What happens? Everything comes out of your pocket. The cost to fix your car or buy a new one is on you. The cost to go to the hospital and surgeries are on you. In other words, you are paying more, much more in one accident than you would be paying in annual premiums for many years if you had insurance.
That is what it is there for, to help you ease the financial burden when you do get into an accident. Estimates are that you will get into an accident every 18 years on average. While it may sound smart then to not carry auto insurance, think again to the costs. A new car is going to cost a few thousand even if you buy used. Medical bills will most likely run in the thousands as well. Unless you have $25,000 sitting in a bank account to cover an auto accident, you are asking for trouble by not carrying it.
In the short-term, it sounds wise to not carry auto insurance. You save some money. And, since you are a good driver, you think you won’t get into an accident. While you may be a good driver, most other people are not. They are the ones you need to be afraid of.
The smart thing to do is to look at the long-term and see what the costs are should you get into an accident. Then compare that with how much your premium will be each year. You’ll find that it is the smart financial move to carry auto insurance.