The Insurance Bulletin
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What Happens if You Have a Car Accident Without Insurance?

car accident no insurance

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Kevin Mercadante
Updated September 14, 2022
5 Min Read

Even though car insurance is required by law in most states, millions of people drive without it. That may work providing you aren’t pulled over by the police or involved in an accident. But what happens if you have a car accident without insurance?

The short answer is that you may need to come up with many thousands of dollars to cover your own expenses, as well as those of the other party in the accident. And at a minimum, you’ll face a variety of penalties imposed by your state.

Living in a State That Requires Car Insurance

If you're involved in an accident that’s determined to be your fault and you don’t have car insurance, the trouble will come from various directions. You’ll not only face the consequences of covering the cost of personal injuries and vehicle damage for yourself and the other party, but also penalties for driving without car insurance.

Penalties for Driving Without Insurance

Nearly all states impose penalties for driving without car insurance (New Hampshire is the exception, and Virginia is a partial exception). Those penalties include fines, license or registration suspension, and even jail time.

The penalties will look like this:

  • Fines – These are imposed in all 49 states (except New Hampshire, and possibly Virginia). The fines are up to $1,000 in many states, but run as high as $2,000 in Delaware, and $5,000 in West Virginia.
  • Suspension of registration, license, or both – Most states employ this penalty, including New Hampshire and Virginia (both under certain circumstances).
  • Jail time – 19 states impose jail time for failure to carry at least minimum insurance coverage. In most states, the sentence is for 15 to 90 days, but can be as long as one year in Georgia, Massachusetts, Michigan, and West Virginia.

But state-imposed penalties will only be the beginning.

At Fault Car Accident 

The main purpose of having car insurance is to cover costs incurred in an accident that’s determined to be your fault. If you don’t have a policy in place, you’ll be required to pay those costs out of your own resources.

That will include the cost to repair – or replace – the other driver’s vehicle. You’ll also be required to pay for any medical costs incurred by the other driver, and any passengers in his or her vehicle who may have been injured.

Needless to say this can easily run into tens of thousands of dollars or even more. If you have any assets, they can be seized to pay the obligation if the other party successfully sues you. You’ll then have a judgment on your record that cannot be removed until it is fully satisfied.

In addition, with a court judgment in place, the other party will also be able to pursue collection against you, even if you have no assets. That can include garnishing your wages or even your bank account.

But you’ll also need to come out of pocket to cover any expenses you have on your end. First and foremost, that will require repairing or replacing your vehicle. You’ll also be on the hook for any medical expenses you incur that aren’t covered by your health insurance plan.

If you have a loan on your car, you’ll still be responsible for making the payments. If the car is beyond repair, you may be required to pay off the entire loan balance.

Not at Fault Car Accident

The situation isn’t nearly as costly if the other driver is at fault, but there will be consequences, nonetheless.

Since you will be determined to be driving without insurance, you will still be responsible to pay any penalties imposed by your state.

The good news is that any expenses incurred by the at-fault party won’t be your responsibility. And while you should be able to collect damages from the other driver’s insurance carrier, there may be limits on how much you can collect since you don’t have your own policy.

There’s another factor many drivers aren’t aware of. When two drivers are involved in an accident, the negotiations and settlements are handled between each driver’s insurance carrier. Since you won’t have one, you won’t have representation. That may open the door for the other driver’s insurance company to give you a less favorable settlement than would be the case if you have your own insurance company in your corner.

Living In a State That Doesn’t Require Car Insurance

There are only two states where you are permitted to drive without car insurance, New Hampshire and Virginia – and Virginia is only a limited exception.

Virginia requires you to meet state-mandated minimum car insurance requirements. However, you can opt out if you pay a $500 uninsured motorist fee to the state. The fee does not provide any type of insurance, but only enables you to drive without coverage – at your own risk.

New Hampshire has no requirement for car insurance, unless you fall into certain high-risk categories that may necessitate maintaining SR-22 Proof of Insurance.

Even if you live in one of these two states, and have no insurance, the outcome will be similar to that of states where car insurance is mandated.

 ·If an accident is determined to be your fault, you’ll need to pay out-of-pocket to cover your own expenses, as well as those of the other party. 

·If the accident is determined to be the other driver’s fault, you can pursue compensation for vehicle damage and medical costs from his or her insurance carrier.

The primary exception is that you will not be subject to penalties, such as fines or jail time, though you may be subject to suspension of your license and vehicle registration.

Car Accident Without Insurance in a No-Fault State

Up to this point we’ve been discussing the consequences of having a car accident without insurance as it applies to states with “at-fault” insurance laws. It’s the more common system, and requires liability for an accident to be paid by the driver who is determined to be at fault in the accident.

But about 15 states are what is referred to as “no-fault” states. In such states, each driver is required to file a claim against his or her own car insurance company, regardless of who is at fault.

While that may reduce your liability in an accident that’s your fault, there will still be consequences.

You will be hit with penalties for driving without car insurance, and you’ll also need to cover your own costs. That will include both damage to your vehicle and any medical expenses not covered by your health insurance.

And even though each driver is responsible to collect damages from their own insurance policies in a no-fault state, the other party may be able to collect damages from you if you are the at-fault party, and those damages exceed a specific dollar threshold set by your state department of motor vehicles. If so, the other party can bring a lawsuit against you to collect compensation directly from you.

Bottom line

Car insurance is expensive, especially if you have moving violations, one or more at-fault accidents, or both. This may tempt you to consider driving without coverage. But if you do, know that the cost it will involve can be many times more than the annual premium, especially if you’re involved in an at-fault accident.