Why One In Seven Drivers Faces Financial Ruin Without Auto Insurance

Most states require drivers to have auto insurance before they can register a car. But if an accident happens in a state where insurance isn’t mandatory, or if the insurance has lapsed, there may be serious consequences.

Normally if you have an accident and the other driver is as fault, but has insurance, a claim is made against their insurance to cover your losses and vice versa. If the other drive has not insurance what happens depends on who was a fault and whether you are in a state that mandates auto insurance or not.

The other driver is at fault

If the other driver has rear-ended you or jumped a red light for example, and it happens in a state that doesn’t mandate insurance, then you may still be able to make a claim for personal injury or property damage against the other driver. This doesn’t depend on insurance, but what you recover it likely to be limited. If you have insurance yourself, you insurer will pay for the first portion of your medical bills and possibly lost earnings, but if you don’t, you will likely have to pay these yourself.

You are at fault

If you are at fault and don’t have insurance, then you have a problem whatever state you are in. The other driver will have the option to file a lawsuit against you personally if they think you have sufficient assets. Alternatively they can file an Uninsured Motorists Claim with their own insurer if they have that type of cover. Once the insurer has settled their claim, it can then come after you to recover what they have paid out and may be able to put a lien on anything you own.

What’s more, if you don’t have insurance when your state requires it, then they can impose penalties on you. These vary from state to state, but can include suspension of your license or vehicle registration and requiring you by law to take out insurance.

As one in seven drivers in the US don’t have insurance, the risks and potential costs are high, so it’s advisable to ensure that you are covered, whether your state requires it or not.