License Or Auto Insurance: What Comes First?

The order in which you obtain a driver's license and auto insurance depends on the state you live in and whether you already have a license. In most states, you need to get car insurance before registering your car. However, some states require you to surrender your current license plates to the DMV before changing insurance providers. Additionally, most dealerships will require you to purchase insurance for your vehicle before leaving the lot. Therefore, it is essential to check with your state's motor vehicle office to determine the necessary documentation and steps to update your license and registration.

Buying a car vs getting insurance first

When it comes to buying a car versus getting insurance, the general consensus is that it is better to get insurance first. This is because, in most states, it is illegal to drive without insurance. While there are a couple of exceptions, with Virginia and New Hampshire not requiring insurance, and some remote parts of Alaska also being exempt, the vast majority of states require you to have at least the minimum liability insurance.

If you are buying from a dealership, they will most likely require you to have insurance before you can drive the car off the lot. If you are buying from a private seller, they may not ask for proof of insurance, but you still run the risk of driving illegally and being liable for high costs if you are in an accident.

It is also worth noting that, if you are taking out a loan to buy a car, the lender will almost certainly require you to have full coverage insurance. This includes comprehensive and collision coverage, which will cover your own damages and medical bills, as well as those of the other driver if you are at fault.

To get insurance, you will need to provide some basic information, such as the make and model of the car, the Vehicle Identification Number (VIN), and your personal details. It is a good idea to shop around and compare quotes from different providers to get the best rate. You can do this by requesting quotes yourself or by working with an independent agent.

In summary, while it is possible to buy a car without insurance in some cases, it is generally much safer and more prudent to have insurance in place first. This will ensure that you are driving legally, have the necessary financial protection in place, and are not left liable for high costs in the event of an accident.

Registering a car without insurance

In most US states, you must show proof of insurance when registering your new car with the Department of Motor Vehicles (DMV). However, there are some exceptions.

States that do not require insurance to register a car

You don't need insurance to register a vehicle in the following states:

• Mississippi
• New Hampshire
• North Dakota
• Tennessee
• Washington
• Wisconsin

States that require insurance to register a car

In most states, you will need a valid insurance policy for motor vehicle registration. You must have at least the minimum amount of car insurance your state requires to register your vehicle with the DMV.

What to do if you plan on driving your car

Nearly every state in the US requires drivers to have liability coverage before they get behind the wheel. If you plan on driving your car after registering it, you will need insurance in all states except New Hampshire and Virginia.

Penalties for driving without insurance

Different states have different penalties for driving without insurance. In many states, it is a misdemeanour, and you could be fined between $25 to $2,500. Repeat offenders will typically face higher fines. Your license or registration may also be suspended.

Driving without insurance

Legal Requirements and Consequences

In most states in the US, it is mandatory to have a minimum level of auto insurance or provide proof of financial responsibility before getting behind the wheel. The specific requirements differ from state to state, but generally, drivers are expected to carry liability insurance to cover bodily injury and property damage in case of an accident. In California, for example, the mandatory minimum coverage includes $15,000 for a single death or injury, $30,000 for multiple deaths or injuries, and $5,000 for property damage. Failing to meet these requirements can result in severe penalties.

Fines and Penalties

If you are caught driving without insurance, you can expect to face substantial fines. For a first offense, you may be required to pay anywhere between $100 and $200, plus penalty assessment fees that can double or triple the total amount. For subsequent offenses, the fines increase significantly, ranging from $200 to $500, with penalty assessments pushing the total cost to over $1,000. These financial penalties serve as a deterrent and emphasize the importance of maintaining the required insurance coverage.

Vehicle Impoundment

In addition to fines, law enforcement officers have the discretion to impound your vehicle if you are caught driving without insurance. This means your car may be towed and held in a lot until you pay the associated fees and demonstrate proof of insurance. Vehicle impoundment can be a significant inconvenience and further adds to the financial burden of driving without insurance.

License Suspension

Increased Insurance Costs

Once you've been caught driving without insurance, you will likely face higher insurance premiums in the future. Insurance companies consider individuals with a history of driving without insurance to be high-risk drivers, and as a result, you may struggle to find affordable coverage. This can create a cycle where individuals struggle to maintain continuous insurance coverage due to the increased costs.

Limited Recourse After an Accident

When you are involved in an accident without insurance, your ability to seek compensation for damages is limited. In a "no pay, no play" state like California, uninsured drivers cannot sue insured at-fault drivers for non-economic damages such as pain and suffering. This means that even if you are not at fault for the accident, you may have to bear the financial burden of repairs and medical expenses out of your own pocket.

In summary, driving without insurance is a risky and costly decision that can lead to legal repercussions, financial penalties, and increased insurance costs. It is essential to prioritize maintaining the minimum required insurance coverage to avoid these consequences and ensure you are protected in the event of an accident.

Insurance before an out-of-state move

When it comes to auto insurance, you don't have to change your policy when moving to a different state. However, it is often sensible to do so, as insurance agents are typically licensed to operate in only one state, and insurance coverage requirements vary across states. For instance, if you move from a fault state to a no-fault state, you will likely have to pay higher premiums and require additional forms of coverage.

Contact Your Current Insurance Company:

Get in touch with your current insurance provider to find out if they offer coverage in your new state. They can also inform you of any changes in coverage costs associated with your move. If they don't serve your new state, ask for a referral to another agent.

Check Your New State's Requirements:

Review the Department of Motor Vehicles (DMV) website for your new state to understand the specific requirements for registration and auto insurance. You will typically have at least a month, and often up to 90 days, to get your new documents in order. Failing to transition your insurance, driver's license, and vehicle registration within this period can result in fines.

Decide on Your New Insurance Policy:

If your current provider serves your new state, you can choose to stay with them to maintain any loyalty discounts. However, be aware that your policy costs may change based on your new location, commute, and other factors. It's worth shopping around and getting quotes from local insurance companies in your new state to find the best deal.

Purchase Your New Policy:

Once you've decided on a new insurance company, complete the necessary documentation and make your first premium payment. Ensure you get the start date of your new policy in writing. You will also need to choose your deductible—a higher deductible will lead to a lower premium cost.

Register Your Vehicle:

After obtaining insurance coverage in your new state, visit the DMV to register your vehicle and obtain a new license plate. You will typically need to provide your driver's license, vehicle title, and proof of insurance, along with proof of residence and identity. Don't forget to mail your old license plate to the DMV in your previous state.

Obtain a New Driver's License:

In most states, you can get your new driver's license when registering your vehicle at the DMV. In some cases, you may need to go to a different location to be photographed and fill out additional forms.

Cancel Your Old Policy:

Once you have your new policy in place, remember to cancel your old insurance policy. Do not discontinue your existing coverage before setting up the new one, as driving across state lines without insurance can result in fines and leave you financially liable in the event of an accident.

Update Your Information:

Inform your former insurance company of your new address so they can send you any necessary correspondence or refunds.

By following these steps, you can ensure a smooth transition for your auto insurance when moving to a new state.

Getting insurance quotes

While it is possible to get car insurance without a license, it is generally more difficult and more expensive. A valid driver's license allows insurance companies to assess your driving record, which is an important factor in determining the risk you pose as a driver and calculating your final insurance quote.

Speak with an independent agent

Independent agents can write insurance policies for multiple companies and may be familiar with local insurers that offer coverage to unlicensed drivers. They can help you navigate the tricky process of finding a policy that suits your needs.

Get a state-issued ID card

Some insurance companies will provide coverage if you have a state-issued ID card. Popular companies like Commonwealth, Advantage Auto, and Direct Auto will issue policies to unlicensed drivers with a valid ID card.

List someone else as the primary driver

If you own a car but don't intend to drive it, some insurance companies will allow you to list another person as the primary driver. This person would need to be a licensed driver and is usually a member of your household, but requirements vary by company.

Add a co-owner to your car's registration

If you're having trouble finding an insurance company, consider adding a licensed driver as a co-owner of your vehicle on the registration. This can be a helpful workaround, as vehicle ownership is typically required for getting car insurance. The process is generally straightforward, involving a visit to your local DMV, filling out a form, and paying a fee.

Buy parked-car or storage insurance

If you don't have a license and plan to keep your car in storage or parked for an extended period, you may want to consider purchasing parked-car or storage insurance. This type of insurance only provides comprehensive coverage for damage to your car while it's not being driven. It's important to note that if you do drive your car, you won't be covered by this type of policy.

List yourself as an excluded driver

This option should be approached with caution. While listing yourself as an excluded driver may allow you to get insurance, you won't be adequately covered if you get into an accident or drive illegally. In the event of an accident, you'll be treated as uninsured, resulting in fines and vehicle impoundment, and you'll have to pay for any damage out of pocket.

It's important to be truthful about your license status when obtaining insurance quotes. Providing false information could result in the insurer dropping your coverage, forcing you to start the process over.

Remember, while you may be able to purchase a car without a valid license, most dealerships will require proof of insurance before allowing you to drive the vehicle off the lot. It is recommended to shop for insurance quotes after determining which vehicle you will be purchasing, so you can get an accurate quote for that specific car.

Frequently asked questions