Just How Bad Is It to Skip Auto Insurance?

The national average annual cost of auto insurance in 2023 was $3,017. That's a lot of money to spend on something that isn't fun or exciting. In fact, it's so much money that some drivers may be tempted to skip auto coverage entirely -- or buy only the bare minimum of protection.

For any driver considering opting out of getting auto insurance, it's worth looking at the potential consequences. The downside of not having the right insurance could be far worse than any possible upside. Here's why.

Skipping auto insurance could have legal consequences

There are a lot of reasons why it's bad to skip auto insurance. But the single biggest reason no driver should ever do this is because there are legal consequences for not getting covered.

Every state has some kinds of requirements for car insurance coverage (although the rules do vary by location). And not fulfilling those requirements could lead to criminal penalties. For example, some potential consequences of going without coverage include:

• Fines
• Suspension of a driver's license
• Suspension of a vehicle registration
• Imprisonment
• Impoundment of a vehicle
• Community service

Basically, it's not worth going to jail over not having insurance -- or covering all of the extra costs that could come from being found without coverage, such as paying to get a car out of impound, re-register the car, and get a license reinstated.

Skipping coverage could also have financial consequences

Some pretty dire financial consequences could result from not having auto insurance -- even beyond the fines and expenses associated with delaying the legal violations. Other ways that a driver's personal finances could be affected include:

• Facing more expensive insurance costs later: Insurers generally charge more to provide coverage to someone who has had a gap in insurance coverage.
• Being personally sued for accident losses: Liability insurance pays for the damage a policyholder causes to others. If a driver doesn't have enough coverage to pay for all of those damages, the victim could personally sue the driver. This could lead to liens on property, wage garnishment, and other legal means of enforcing a court judgment.
• Having to pay to repair or replace a vehicle: Drivers aren't usually required by law to buy comprehensive coverage (which pays for their non-crash losses) or collision coverage (which pays for their crash-related loss not caused by another driver). But going without these coverages would mean having to pay to repair or replace a car out of pocket after something goes wrong.

Most people cannot just pay to get a new car or pay for thousands or even millions in damages they cause if they injure someone. That's why it is so important to buy insurance in the first place -- so the auto insurer is there to pay for these things.

The bottom line is, going without auto insurance is really bad. Drivers should not only make sure they have the coverage required under state law, but should get full coverage -- including collision and comprehensive insurance in most cases. This may seem costly, but it's a lot less expensive than dealing with the fallout of having no insurance when something goes wrong.