Most states require drivers to have automobile insurance as a condition of registering a car. But if you live in one of the few states that do not have this requirement, or if you let your automobile insurance lapse, and you get into a car accident, what will happen after the accident depends on who is at fault for the crash and whether you live in a “no-fault” car insurance state. (Learn more about car insurance laws in your state in our State Car Insurance Laws section.)
If the Other Driver Is at Fault in a "Fault" State
This is the easy one. If you get into a car accident that is the other driver’s fault, and you are not in a no-fault state, you can make a claim against the other driver’s insurance company. This is true whether the accident caused you injury, damaged your vehicle, or both. This kind of claim is known as a "third party" claim, since you are not one of the two parties to the insurance relationship (that would be the other driver and his or her insurance company).
If The Other Driver is at Fault in a "No-Fault" State
No-fault insurance means that your automobile insurer will pay some or all of your medical bills if you get into a car accident, regardless of who was at fault for the accident. Currently, the following states follow some type of no-fault system (click on the state name for details on how no-fault claims work):
- New Jersey
- New York
- North Dakota
If the other driver is likely at fault for the accident (i.e., the other driver rear-ended you or ran a red light or a stop sign), and you are in a no-fault state, then you will still be entitled to make a claim for personal injury or property damage against the other driver, but your overall recovery may be limited.
Remember that, if you carry required insurance in no-fault insurance states, it is your insurance company that pays for the first portion of your medical bills. In no-fault states, your insurer may also pay for the first portion of your lost earnings and property damage claims. (Learn more about How No-Fault Works.)
If you have no automobile insurance, then it is likely going to be you, not the other driver’s insurer, who will be responsible for paying the first portion of your medical bills. Nor will the other driver’s insurer be responsible for paying the first portion of your lost earnings or property damage claims. However, your ability to make a personal injury claim against another driver for his/her negligence does not depend on whether you have car insurance yourself. You will still be able to make a personal injury claim against a negligent driver. (Get more information on Fault for a Car Accident.)
If You Are Likely at Fault
If you think that you are likely going to be found at fault for a car accident (i.e., you rear-ended the other driver, or you ran a red light or a stop sign), and you have no automobile insurance, then you will likely have a problem regardless of what state you are in. There is not much that you can do except tell the other driver that you have no insurance. Do not refuse to answer questions about your insurance situation, or say that you have coverage when you don't. That will just make matters worse.
What will happen next is that, unless you appear to have significant personal assets, the other driver will file an uninsured motorist (UIM) claim under his or her own car insurance policy, assuming they have that kind of coverage. After the insurer resolves the claim (which may take years), the insurer will likely sue you to recover whatever it paid its own insured. This procedure is called subrogation.
If an insurer sues you in a subrogation case, you are going to have to pay it something in order to settle the case and make it go away. In subrogation cases, the insurer knows that defendants (you would be the defendant) most likely do not have much money, so it will not be looking for full reimbursement of the amount paid out under the UIM claim. But it will be looking for something, and, in order to resolve the case, you will need to fill out a financial affidavit for the insurer and perhaps even provide the company with copies of your tax returns.
The fact is, driving without car insurance is a bad idea. If you can’t afford to insure your car, you probably shouldn't drive. If you have no insurance and you cause a car accident, it will likely end up costing you a lot more money than years worth of monthly insurance premiums would have cost.