Uninsured And Unwise: The Risks Of Driving Without Auto Insurance

If you don't have auto insurance, you're not alone. According to a 2021 report, one in eight drivers do not have car insurance. However, driving without insurance is not only illegal but can also lead to severe financial consequences if you're in an accident. While you may not need insurance if you don't own a car or never drive, it's essential to understand the risks and alternatives if you do drive occasionally. Non-owner car insurance can provide liability coverage for those who don't own a car but still want protection.

You're buying a new car

If you're buying a new car, you'll need to get auto insurance. Almost every state in the US requires drivers to have auto insurance, and you must have insurance for your new vehicle before driving it off the lot.

If you already have insurance for a car you're trading in, your insurance company may automatically cover your new vehicle, but you'll need to let them know that you've bought a new car so they can add it to your existing policy. It's best to check with your insurance company before buying your new car to ensure you have the protection you need. You typically have seven days to a month to inform your insurer about your new purchase, but rules vary by insurance carrier, and some won't automatically protect you.

When you buy a new car, you'll need to take care of a few important tasks before driving away. You'll need to insure your car, get the title, keep the bill of sale, get temporary tags, and register your vehicle.

It's also a good idea to get pre-approved for a loan before going to a dealership. This will give you an idea of how much you can afford and help you negotiate a better rate. You can get a loan from a lender outside the dealership, such as a bank, credit union, or online lender. Shop around for the best rate, as people are often charged more for interest rates than they should be based on their creditworthiness.

At the dealership, focus on one thing at a time and don't tell the salespeople too much. Start with the price of the vehicle and don't answer questions about whether you're planning to trade in another car or get a loan through the dealership. Once you've settled on a price, you can talk about a trade-in if you have one. Do your research beforehand to know what your trade-in is worth.

Finally, don't buy any add-ons at the dealership, such as extended warranties, tire protection plans, or paint protection plans. These are often very overpriced and unnecessary.

You live with someone who owns a car

If you live with someone who owns a car and you want to drive that vehicle, the insurance company may require you to be added to the owner's policy. This is true even if you only drive the car occasionally. If the policy doesn't include your name and you have an accident, you may not be covered.

If you live with the car owner, it's easier for them to add you to their policy than for you to buy insurance for the vehicle. However, if you live away from the primary owner and need your own policy, you can list the vehicle owner on your insurance policy as an additional interest.

Another option is to buy a non-owner auto insurance policy. This is a liability insurance policy for people who drive another person's vehicle occasionally but do not have insurance themselves. This coverage will complement the vehicle's primary policy. For example, if you borrow a friend's car and have an at-fault accident, your non-owner policy would only apply if you exceed the property damage and bodily injury liability coverages carried by your friend. However, a non-owner policy may not be offered if you frequently use the car.

If you borrow a car that belongs to someone you live with, you should be covered by their insurance as long as you are listed on their policy. Check with the owner to make sure they've added you before borrowing the car.

You frequently rent cars

If you frequently rent cars, you should consider purchasing a non-owner car insurance policy. This type of insurance provides liability coverage for bodily injury or property damage you may cause while driving a rented car. It is important to note that non-owner insurance does not cover damage to or loss of the rental car itself. For that, you would need to either purchase a collision damage waiver from the rental car company or rent the car using a credit card that provides this coverage.

Non-owner car insurance can be useful if you rent cars often and want to avoid the cost of purchasing rental car insurance each time. It can also help you maintain continuous auto insurance coverage, which can make it easier to obtain auto insurance in the future and prevent your rates from spiking due to a lapse in coverage.

When renting a car, you will typically be offered the option to buy liability coverage from the rental car company. This coverage pays for lawsuit-related costs if you cause an accident while driving the rental car. You may also be offered a collision damage waiver, which releases you from financial responsibility for damage to or theft of the rental car. These options can provide valuable protection, but they can also be expensive and may duplicate coverage you already have through your non-owner insurance policy.

Before renting a car, it is important to review your non-owner insurance policy to understand what is and is not covered. You should also consider the level of coverage provided by your credit card company, as some credit cards offer rental car coverage. By carefully reviewing your existing coverage and comparing it to the options offered by the rental car company, you can make an informed decision about whether to purchase additional rental car insurance.

You need proof of insurance

Proof of insurance is a document that shows the insured's name, identifying information about your car, your policy number, and the effective dates of your policy. It is required by law in most states and serves as evidence that you have valid auto insurance that meets the state's minimum requirements. This document can be in physical or digital form, with 49 states and Washington, D.C., accepting electronic proof during a traffic stop. New Mexico is the only state that requires a physical copy of your proof of insurance.

When You Need Proof of Insurance

There are several scenarios where you will need to provide proof of insurance:

• Registering a new vehicle: When purchasing a new or used car, you must provide proof of insurance before you can drive it off the lot.
• Renewing your license: You will need to show proof of insurance each time you renew your license plate or get a Real ID.
• Traffic stops: If you are pulled over by the police, you must show your license, registration, and proof of insurance. Failure to do so can result in stiff fines or even jail time, depending on the state.
• Car accidents: After a car accident, you will need to exchange insurance information with the other driver and provide proof of insurance to the officer on the scene.
• Applying for a new insurance policy: When applying for a new auto insurance policy, your new insurance company may request proof of insurance from your current provider to avoid a coverage gap, which can lead to higher premiums.

How to Obtain Proof of Insurance

You can obtain proof of insurance from your insurance company after purchasing a policy. Some companies provide immediate proof via fax or email upon receiving your first premium payment. You can also access your insurance ID card online through your insurance company's website or mobile app. It is recommended to keep a physical copy of your proof of insurance in your vehicle's glove compartment and have an electronic copy readily available on your mobile device.

You drive a company car

If you drive a company car, you may not need to purchase your own auto insurance policy. This is because the vehicle belongs to the company and should be covered by your employer's commercial auto insurance. However, it is important to note that the policy limits of your employer's insurance may not be adequate to fully protect you in the event of an accident.

If you are an employee utilizing a company vehicle, it is your responsibility to ensure you are legally allowed to drive it. You should also understand the insurance policy for accidents and always follow road laws and regulations.

If you are using the company car for personal errands, you should check with your employer, as this may not be covered by their insurance. Using a company car for personal use can open the business up to a significant amount of legal risk and damage to its reputation if certain actions occur, such as drinking and driving or a severe personal accident.

If you are concerned about the level of protection offered by your employer's insurance, you may want to consider purchasing a separate policy to provide additional coverage. This is known as "non-owner" car insurance, which provides liability coverage for any bodily injury or property damage you cause when driving a car you do not own. Non-owner insurance typically costs less than regular car insurance because the car itself is not covered by the policy.

In summary, if you drive a company car, your employer is generally responsible for insuring the vehicle. However, it is important to understand the insurance policy and any limitations, especially if you intend to use the vehicle for personal use. If you are concerned about the level of protection, you may want to consider purchasing additional coverage through a non-owner car insurance policy.

Frequently asked questions