Yes, it is illegal to drive around without insurance, or without proving financial responsibility, if you are driving your own vehicle. You can face serious penalties for driving without insurance or proof of financial responsibility, such as having your license suspended, large fines, or even jail time. However, if you are borrowing a vehicle, you will typically be covered under the owner’s auto policy and do not need insurance of your own.
Key Things to Know About Driving Without Insurance
You still need insurance to drive a brand-new car. Even if you have just purchased your vehicle, you will likely have to show proof of insurance in order to drive off the lot. However, if you already have an existing policy, most major insurance companies offer a grace period when you purchase a new car. This grace period typically lasts seven to 30 days and extends your existing policy to your new car.
Make sure you are not underinsured. In order to drive legally, you need to carry at least the minimum amount of insurance coverage required by your state. If you do not have enough coverage, you are driving illegally.
If you drive without insurance, your state’s DMV may find out. A lapse in coverage may result in fines, license suspension or even jail time if you are caught driving without your state’s minimum coverage requirements. When switching policies, it is best to not cancel your existing policy until the new one is in effect.
Some states do not require car insurance if other requirements are met. For example, in Virginia, you are not required to have car insurance if you pay a $500 uninsured motorist fee to the Virginia DMV each time you renew your registration. Similarly, if you can prove you have sufficient funds to cover the cost of damages in the event of an accident you are at fault for, you may not need car insurance in New Hampshire, either.
When borrowing a car, you are covered by the owner’s policy. If you are borrowing a vehicle, you will almost always be covered by the owner’s policy since insurance policies generally follow the vehicle, not the policyholder. However, if you are borrowing the car long-term and want additional coverage, you should consider non-owner car insurance.
You may have anywhere from 2 to 30 days to tell your insurance company that you bought a new car if you are already insured, depending on financing and coverage details. If you don’t have car insurance already, you’ll need to get a new policy before you can legally drive your new car. Most car dealerships require … read full answerproof of insurance to drive off the lot, so you’ll have to do some planning.
Either way, it’s wise to get car insurance quotes for different vehicles before buying one. That way, you’ll have a sense of which make and model is likely to increase or decrease your premium the most. At the very least, it’s something to take into account when picking your new car.
If you have an existing car insurance policy, there are two common grace periods for getting insurance on a new car:
2 to 4 days is common if you are adding a new car to an existing policy. Most car insurance companies will extend coverage to the new car in good faith, since it is usually required to get a loan. Such policies are designed to allow you to drive your new car home and make a call to your insurer quickly thereafter.
7 to 30 days is common if you are replacing a covered vehicle with a new car you purchased outright. In these cases, you can probably expect to have the same level of coverage as before. If you had liability-only coverage on the car you’re replacing, your new car would also have liability-only coverage.
Your policy term will transfer to the new vehicle in most cases, so you won’t have to start over with a new six-month or one-year policy.
If you are financing or leasing a new car, you may also want to consider adding gap insurance to your policy. Gap insurance will help pay the difference between the car’s market value and what you owe on your loan. Although collision coverage will pay fair market value for a totaled car, that may end up being less than you owe if you total your new car right away.
No matter how much time your insurance company gives you to get insurance on a new car, it’s best to reach out as soon as possible. Coverage specifics vary widely depending on state laws, insurance company rules, and individual policy provisions. If you miss a deadline, you could end up driving uninsured, which could result in legal fees, higher car insurance premiums, loss of your driver’s license, and more.
The fine for driving without insurance ranges from $50 to $5,000, depending on the state and whether it is a repeat offense. Driving without insurance can also result in jail time, license suspension, an SR-22 requirement, and higher insurance premiums.
If you cause an accident while driving without insurance, you’ll be responsible for covering the cost of the damage yourself, on top of any legal consequences your state may enforce. You will also be classified as a high-risk driver for 3 to 5 years, on average, making car insurance more expensive and harder to get.
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