States Exempting Car Insurance

In the US, nearly all states require drivers to have a minimum of auto insurance. However, there are two states that don't require car insurance: New Hampshire and Virginia. In Virginia, drivers can pay the state a $500 fee per year to opt out of the state's insurance requirements, but they will still be liable for any damage they cause in an accident. In New Hampshire, residents are also responsible for damages resulting from a car accident: up to $50,000 for liability and $25,000 for property damage.

New Hampshire and Virginia are the only two states that don't require car insurance

New Hampshire and Virginia: The Only Two States That Don't Require Car Insurance

While most states in the U.S. require drivers to have a minimum amount of auto insurance, New Hampshire and Virginia are notable exceptions to this rule. In these two states, driving without insurance is perfectly legal, but there are still some important liability requirements that drivers must adhere to.

New Hampshire

In New Hampshire, drivers are not mandated to carry auto insurance. However, this does not mean they are exempt from financial responsibility in the event of an accident. If a driver causes an accident, they are still liable for any bodily injury and property damage that occurs. The state will demand proof of insurance or the ability to pay for treatment of up to $50,000 in injuries and $25,000 in property damage. If a driver cannot provide this, their license and registration may be suspended.

Virginia

Virginia residents also have the option to forgo car insurance. Instead, they must pay an annual $500 Uninsured Motor Vehicle Fee to the Department of Motor Vehicles (DMV). However, this fee does not provide any accident coverage. If a driver causes an accident, they are still financially responsible for any property damage and bodily injuries that occur.

The main reason that most states mandate auto insurance is to protect the victims of car accidents. If a driver is at fault in an accident and does not have insurance, they may not have the financial means to cover the damages to the other driver and their property. By requiring liability insurance, states ensure that victims can receive financial relief without severely impacting the financial well-being of the at-fault driver.

Virginia residents can skip insurance by paying the state a $500 fee

Virginia is one of two states that previously did not require car insurance. However, this changed on July 1, 2024, when a new law came into effect mandating that all drivers in the state must purchase at least the minimum amount of liability insurance.

Before this change, Virginia residents could choose to pay an annual $500 uninsured motorist fee to the state instead of buying car insurance. This option did not provide any kind of accident coverage, and drivers were still financially liable for any damage they caused in an accident. The fee was paid to the Virginia DMV when registering an uninsured vehicle.

The uninsured motorist fee was eliminated due to concerns that it did not provide adequate protection for drivers. In the event of an accident with an uninsured driver, it could be difficult for the affected parties to receive compensation for damages and injuries. By requiring all drivers to have insurance, the state aims to improve financial protection for all motorists.

The new law will not prevent all motorists from driving without insurance, but it is a step towards ensuring that more drivers have financial coverage in the event of an accident.

New Hampshire drivers must prove they can cover $100,000 in financial responsibility

New Hampshire is the only state that does not mandate auto insurance for all drivers. Instead, it requires drivers to show that they are able to provide sufficient funds in the case of an at-fault accident, i.e., proof of financial responsibility. This means that drivers must be able to prove that they can cover the costs of any personal injuries and property damage they cause in an accident.

The Motor Vehicle Financial Responsibility Law (FRL) requires drivers to provide proof of financial responsibility in the following amounts: $25,000 for bodily injury to, or the death of, one person in one accident; $50,000 for bodily injury to, or the deaths of, two or more persons in one accident; and $25,000 for property damage in one accident. This is often referred to as "25/50/25 liability coverage" in the insurance business.

Drivers can prove their financial responsibility by either purchasing and maintaining an auto insurance policy or depositing money or securities with the state treasurer. While auto insurance is not mandatory in New Hampshire, it is the easiest way to comply with the FRL, and the overwhelming majority of New Hampshire drivers choose to do so.

If a driver is required to have auto insurance, the policy must also include at least $1,000 of medical payments coverage and uninsured and underinsured motorist coverage. The requirement to carry auto insurance usually comes into effect if a person is convicted of certain motor vehicle-related violations, such as driving while intoxicated, vehicular homicide, leaving the scene of an accident, or repeat offenses of reckless operation of a motor vehicle.

In the event of an accident, a driver's liability insurance will pay damages—up to the limits of their coverage—to others who are injured or whose property is damaged. This includes medical bills, lost wages and benefits, replacement household and child care services, out-of-pocket expenses, loss of enjoyment of life, and costs to repair or replace damaged property. It is important to note that liability insurance only pays for damages caused to others and will not cover the driver's own losses.

While New Hampshire does not require drivers to carry auto insurance, it is still their responsibility to provide proof of financial responsibility and cover any costs resulting from an accident.

Drivers without insurance are liable for all costs if they cause an accident

In the US, nearly all states require drivers to have a minimum amount of liability insurance. This is to ensure that, in the event of an accident, the driver who is at fault can cover the costs of any injuries or damage they cause. Liability insurance covers two types of costs: bodily injury liability and property damage liability.

If a driver does not have insurance and causes an accident, they will be personally liable for all the costs resulting from the accident. This includes medical expenses, pain and suffering, loss of income, and legal fees if the injured party sues. The driver may also face legal consequences such as fines, suspension of their driver's license, and even jail time.

In the case of an accident, the driver at fault is responsible for covering all crash-related costs, including medical bills, lost wages, pain and suffering damages, and emotional distress damages, regardless of the severity of the injuries. If the driver does not have insurance, the injured party can try to collect this money from the driver personally.

Even in the two states that do not require car insurance, New Hampshire and Virginia, drivers are still financially responsible for any damage or injuries they cause in an accident. In Virginia, drivers can pay an annual $500 Uninsured Motor Vehicle fee to the state instead of purchasing insurance, but this does not provide any accident coverage. In New Hampshire, residents are responsible for up to $50,000 in liability and $25,000 in property damage if they cause an accident and are uninsured.

Self-insurance is an option in some states, but it's not for individuals

There are three main ways to self-insure your car: cash deposits, certificates of self-insurance, and surety bonds. Each state has its own rules and requirements for self-insurance, and not all states allow it.

For example, in California, drivers can set aside $35,000 in a cash deposit or surety bond and be considered self-insured. In Texas, individuals can deposit $55,000 worth of securities with the state comptroller as proof of financial responsibility. However, as one commentator points out, if you have $55,000 to spare, it would make more sense to buy liability insurance and purchase more than the minimum coverage.

Another example is New Hampshire, where residents are responsible for up to $50,000 for liability and $25,000 for property damage in the event of a car accident. While New Hampshire does not mandate car insurance, residents still need to prove they have the financial means to cover these costs in the event of an accident.

Virginia is another state that doesn't require car insurance, but drivers can instead pay the state a $500 uninsured motorist fee each year. However, this fee does not provide any accident coverage, and drivers are still financially liable for any damages they cause in an accident.

While self-insurance can save money on insurance premiums, it's a big risk. If you choose to self-insure and are in a car accident, you could be facing tens or even hundreds of thousands of dollars in property damage and bodily injury costs.

Therefore, self-insurance is only a viable option for individuals with substantial financial means who are willing and able to take on the risk of paying high out-of-pocket costs in the event of a car accident.

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