Don't Have Auto Insurance? Here Are Some Alternatives

A worrying number of American drivers don't have auto insurance. According to a recent report from the Insurance Research Council, there were about 1 in 7 uninsured drivers on U.S. roads in 2022. With around 240 million drivers, that equates to over 33 million who don't have car insurance.

The biggest reason people drive without insurance? It's expensive. The Ascent research shows the average annual auto insurance premium in 2023 was over $3,000. Not only are higher living costs still biting into everybody's budgets, but insurance premiums have also increased dramatically. Data from the Bureau of Labor Statistics shows average auto insurance costs rose 14% in 2022 and another 20% in 2023.

Some people are opting to skip insurance as they try to keep their heads above water financially. Unfortunately, that can be a costly decision.

What happens if you drive without insurance?

Driving without insurance can be risky both legally and financially. For starters, it is mandatory in most of the country. Depending on the state, you could face a fine, suspension of your license, and even jail time if you're caught. Moreover, if you have an accident and you are found to be at fault, you could have to pay thousands -- even tens of thousands -- of dollars in damages.

You may also run into difficulties if you need to renew your drivers license, rent a car, or get pulled over for any reason. Plus, having a gap in your auto insurance payments can mean your premiums become even more expensive further down the line.

Alternatives to driving without auto insurance

If you can't afford to cover your car insurance costs, the temptation to cancel your insurance is understandable. Before you take that risk, here are three other routes you might take.

1. Look for ways to reduce your premiums

Call your insurer and see if you can negotiate any reductions. If you're unable to pay a bill, be upfront and see if you may delay the payment.

Common ways to score lower premiums include:

• Bundle your insurance policies: You might be able to get a discount by buying more than one insurance policy from the same company. Allstate says you can save as much as 25% this way.
• Use a tracking device: Depending on your habits, a mobile app or in-car device that monitors your driving could swing you as much as 30% off your premiums. That said, if you regularly drive at night, drive fast, or brake heavily, it may work against you.
• Increase your deductible: Your deductible is the amount you pay before the insurance money kicks in. Let's say your car breaks down and the repairs will cost $3,000. If you have a $500 deductible, you'd pay that and the insurance company would pay $2,500. A higher deductible could mean lower premiums -- but try to put aside enough cash to cover that increased upfront cost.
• Compare car insurance rates: Don't be afraid to shop around. Get quotes from a couple of providers to see which one will give you the best deal.

2. Look into state-sponsored low-income car insurance

Find out if your state offers any kind of assistance when it comes to paying your premiums. For example, the California Low-Cost Automobile Insurance program helps low-income households get affordable insurance in the state.

Your state insurance department might also have information about low-cost options, as well as what the insurance rules are in your state. Understanding the minimum insurance requirements can help to cut your premiums. That said, be aware that minimum coverage may be of limited help financially if you're at fault in an accident.

Some states might allow you to take out a surety bond instead of car insurance. This essentially means the bond company will cover the costs if you're in an accident. But unlike insurance, if the bond company has to pay out, you are still on the hook for that money. You'll have to pay the bond company back over time.

3. Consider ditching your car

Cars are an essential part of many people's lives -- they need them to get to work, get the kids to school, shop for groceries, and much more. But if you can't afford auto insurance, you are running a risk by being on the road. See how far you can get using public transport, ride sharing, and carpools.

Sure, it won't be as convenient. And it may not be possible for every household. However, AAA puts the average cost of owning a new car at over $10,000 a year. As such it could make a lot of financial sense, even if you have to spring for car rental and rideshare costs. Rideshare service Zipcar estimates its members saved over $1,000 a month by using its service rather than owning a car. It charges members $9 a month in membership fees along with an hourly driving rate that starts at $11.

If you only drive occasionally, you might also be able to borrow a car from a friend or relative and piggyback off their insurance when you do. Just make sure it isn't a regular thing, in which case they'd need to add you to their policy.

Key takeaway

If you're having to choose between covering essential bills like housing and utilities and paying your insurance, it probably feels as if you are between a rock and a hard place. Even so, don't drive without insurance. See if you can find a way to bring in some extra cash through a side hustle rather than risking the roads without coverage.