Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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The lowdown...

  • Auto insurance isn’t something that should be considered optional when you own a registered car
  • In most states, you’re required by the state’s vehicle code to carry auto insurance to register, park, and drive a car
  • You must pay the amount that’s due in full and on-time to keep your auto insurance policy active at all times
  • If you can only afford to make a partial payment and you’re already set up to pay monthly, your policy will cancel
  • Some states have special state insurance programs for low-income drivers who can’t buy standard insurance coverage

Owning a car can get expensive. Loan payments, interest expenses, gas bills, and maintenance fees all add up. This is why so many parents tell their teen and young adult children to do their research before they rush to buy a car that they haven’t budgeted for.

You may be able to afford the car payment itself, but you need to have enough money left over to cover other expenses that are unavoidable.

You have to have gas to get from point A to point B. You also have to pay:

  • the sales tax
  • titling fees
  • registration fees

Other hidden expenses like insurance must be budgeted for each year. Make sure you pay the lowest premiums possible! Enter your zip code above and begin comparing rates.

If you can’t afford your insurance, it could pose not one but many problems. Here’s what you should know:

Buying Insurance is a Must in Most States


Auto insurance isn’t just one of those bills that you can do without. It’s a necessary and mandatory form of protection in almost all states.

Since motor vehicle liability insurance is mandatory in all states with the exception of Virginia and New Hampshire, it’s best that you know what the expense will be before you even take a ride to shop for cars.

When insurance is mandatory it doesn’t mean that you’re required to buy a full-featured policy that covers everything from tows to thefts. State mandatory insurance laws were created and implemented in an effort to protect people and pedestrians from drivers.

Since a car can easily wreak havoc on property and people if it’s not operated safely, everyone who owns one needs liability insurance.

In a tort state, where every driver is held liable for the injuries that they cause, the state law will require at least third-party liability insurance. That consists of Bodily Injury and Property Damage coverage.

If you live in one of the twelve no-fault states, everyone’s insurance pays for their own medical bills so you’ll need to carry Personal Injury Protection.

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How much insurance do you have to have?


It’s not just what type of insurance you buy that matters, it’s how much coverage you buy too. Every state has minimum coverage limit requirements that you’re expected to comply with.

What’s nice is that you can’t actually buy less than what’s required by law as long as you’re buying a policy from a company with a state license to sell car insurance.

State requirements can vary. In some states, like California, you can carry as little as $15,000 per person and $30,000 per accident in Bodily Injury and legally drive. In other states, the requirements are much higher.

Arkansas and Maine both require drivers to carry $50,000 per person, $100,000 per accident in Bodily Injury. When requirements are higher, the average premium in the state is higher as well.

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Do you ever have to carry anything more than the state requirements?

The state isn’t ever going to require you to protect your own property. If you’re ever told that state law requires you to buy full coverage on your car, you better run to another agent quick.

Buying damage coverage on your vehicle is never required under state law but it might be required by the vehicle owner.

If you’re financing or leasing your primary vehicle, you need to budget for more than just the motor vehicle liability coverage and the no-fault coverage that’s mandatory. Finance companies will always require you to buy full coverage on the car so that it’s protected while you’re under contract.

What is required when you’re leasing a car?


Requirements for vehicles that are leased tend to more strict that the requirements for financed cars. When a car is being leased, you’re just paying to borrow the car until you return it or until you negotiate a purchase price.

Because of this, lessors want you to buy full coverage and higher limits of liability so the leasing company can’t be held liable.

If you’re having a tough time keeping up with your monthly bills and you let your insurance cancel, you’ll have some explaining to do. No matter how good you are at convincing someone that you

No matter how good you are at convincing someone that you failed to make your payment by accident, when you don’t have insurance you’ll have to pay the consequences.

A policy that’s not paid up to date will cancel for non-payment. As soon as this happens, the state’s motor vehicle department is permitted to fine you for failing to carry insurance on a registered car. Not only could you be fined, the following could happen:

  • If you don’t respond to the notice sent by the DMV, your registration could be suspended
  • If you’re driving without insurance or without valid tags, you could be cited and ordered to pay a fine
  • In some states, your car must be towed and impounded at the scene when you’re pulled over for no insurance
  • If you violate the law multiple times, your license could be suspended
  • You’ll be required to buy insurance and pay a reinstatement fee before you can legally drive
  • You’ll be ordered to file an SR-22 with the state to show you’re financially responsible
  • You’ll have to pay more for your insurance because you’ve had a lapse in coverage

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What happens if you have basic insurance on a financed or leased car?

If you’re financing or leasing a car, you can’t only buy a basic policy and call it a day. Your lending contract or lease contract will lay out how much insurance you’ll have to have to satisfy the requirements of the loan.

Typically, that means you’ll need comprehensive and collision with acceptable deductibles, which will bump up your rates substantially.

If you can’t afford to carry full coverage on your vehicle after you’ve already entered into the contract, you’re going to have to answer to the finance company.

No finance company will just accept that you’re driving property they own without any type of physical damage protection on the car. As soon as the company finds out you have basic insurance, the following is going to happen:

  • You’ll receive a letter from the finance company asking for proof of your full coverage insurance
  • If you don’t respond to the request for information, the insurer will add the premium for forced-placed insurance to the balance of your loan
  • Your payment will go up or you’ll pay a balance at the end of the loan
  • The lender will ask you for proof of insurance with a loss payee clause to remove the insurance from your finance contract

Tips When You Can’t Afford Insurance


You might not be able to just let your policy lapse, but there are some solutions to consider. Only buy a vehicle when you’re absolutely sure that you can afford to keep the car running and insured. Here are tips that can be considered:

  • Set up an installment plan so that you can pay monthly instead of paying the premium in full
  • Take the highest deductibles you can
  • Buy a basic policy when allowed
  • See if your state has government-sponsored insurance program just for low-income families

If you can’t afford to buy insurance, you really shouldn’t have a car. Having a car without insurance is only cause for issues. To find quotes for low-cost insurance, use the Internet and see how low the premiums can be. Use our free comparison tool today!