Here's What Happens if You Don't Have Enough Auto Insurance

Auto insurance is definitely not the most fun purchase to put on your credit card. But, every driver should make sure they not only have the coverage required of them but that they have a sufficient amount of insurance coverage to protect their checking account balance if something goes wrong.

While it may be tempting to purchase as little insurance as possible, be sure to consider what can actually happen to drivers with too little coverage.

Inadequate insurance coverage could be a violation of state law

In most states, a certain minimum amount of liability insurance is required. Driving without that required coverage could have serious legal consequences. Penalties for driving without insurance can include fines, license suspension, suspension of a vehicle registration, and even potential jail time.

There is absolutely no situation in which any driver should allow themselves to get behind the wheel of a vehicle without state minimum required insurance coverage. The consequences are just too great.

Drivers with too little insurance could face huge out-of-pocket losses

Drivers who do not have the required liability insurance could be held personally liable for any damage they cause others. For example, if a motorist causes a crash and doesn't have insurance and does $10,000 in damage to someone's property, the property owner could sue the at-fault driver who caused the incident. If the owner gets a judgment against the driver, the owner could take action to collect, such as getting a court order to garnish the driver's wages.

In many states, drivers who cause crashes are responsible for not just property damage but also for injuries or deaths they cause. Pain and suffering, emotional distress, medical bills, and lost wages resulting from injuries or from a fatal accident can come at a cost of tens of thousands or even millions of dollars. Drivers without liability insurance can be sued for this money and have collections actions taken against them.

Drivers can also face losses even if they have the state minimum required liability insurance. If the damage a driver does to others exceeds the amount of liability coverage they have, they could be personally sued for any money their insurer won't pay. There's a very real chance of this happening, since state liability coverage requirements are usually pretty limited. Many states only require $25,000 per person and $50,000 per accident or less in liability coverage and even relatively minor injuries can end up costing more than that amount.

Without the right insurance, a driver may not be able to afford to repair their own car

A motorist who only has liability coverage would also have no protection for their own vehicle if something went wrong that wasn't caused by someone else. Without comprehensive and collision coverage, that driver would have to pay the out-of-pocket costs to repair or replace their vehicle and cover any resulting additional losses from the crash. Most states don't require these kinds of insurance, but a driver without them could still face financial disaster.

No driver should risk losing tens of thousands of dollars -- or more -- by driving without the right insurance. Be sure to get plenty of liability coverage, and also a policy that will replace a vehicle owned by the policyholder if something goes wrong. It's the only way to avoid potential financial disaster.