Three States Allow No Auto Insurance, But Is It a Good Idea?


Although it’s taken as an article of faith that auto insurance is required to legally operate a motor vehicle in the United States, there are exceptions. New Hampshire, for instance, does not force drivers to buy car insurance, but drivers must be able to financially cover the costs of any damage they cause behind the wheel.

Both South Carolina and Virginia allow drivers to skip buying auto policies, but they must pay a $500 – $550 fee. During a traffic stop, a driver would produce proof that the fee was paid, and would not be ticketed for driving uninsured, but would still be responsible for any damages.

Isn’t It Cheaper Just to Pay the Fee?

Since the fee must be paid every year, it’s not really a matter of saving money, but more a statement of protest or civil disobedience. There are approximately 5.4 million licensed drivers in Virginia. In 2011, only 2,435 chose to pay the fee over buying an auto insurance policy. South Carolina has offered the optional fee since 1999, and only 41 drivers have opted to pay over the entire 13-year period.

There Are Still Potential Penalties

In South Carolina, drivers who don’t have insurance and who don’t pay the fee to drive uninsured face a $200 fine and $5 a day up to another $200 until they have either secured coverage or paid the fee. There are also stringent requirements for those who can opt to pay the fee over actually being insured.

Opting to pay the fee even once, just to make a point, can also have serious future consequences. Almost all insurers reward customers for continuous coverage with no gaps. If a policy is allowed to lapse, when you go back to get another policy, you will likely be facing higher rates.

Carrying Auto Insurance is the Better Option

Even in states where drivers have an “out” when it comes to auto insurance, actually carrying coverage is always the better option. Given the high cost of medical care and steep repair costs, the risk of driving uninsured is much more potentially painful than finding comprehensive affordable auto insurance and paying the premiums.

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