The laws concerning car insurance vary from state to state and country to country, but in the US, most states have "financial responsibility" laws that dictate how much insurance every driver must carry in order to drive on public streets. The absolute minimal coverage required is called liability insurance, which only provides financial restitution for injured third parties and damaged property. The driver's own losses are usually not covered. Failure to buy at least minimal car insurance can lead to a substantial fine, court-ordered community service, and the loss of driving privileges for up to a year.
In this day and age of mandatory car insurance laws, it is very difficult to go through life without some proof of financial responsibility. Many lenders will not finance a car until the borrower agrees to provide minimal insurance on the vehicle. In the US, police have the right to set up traffic checkpoints and request proof of coverage. A few states allow some drivers to provide alternative proof of financial responsibility, such as a surety bond or self-insurance policy, but this practice is not very common.
If you are aware that you do not have coverage and you continue to drive a vehicle, you can be held liable for all medical expenses suffered by the other party in a major accident. You will also be responsible for restoring the damaged vehicle to its original condition, or for paying for a replacement vehicle out-of-pocket. If a police officer discovers that you have no viable insurance, you could be charged with a violation of state law, and the courts will impose fines, community service, and/or the suspension of driving privileges. At least three points may be added to a driver's record in states using a punitive point system.
If you are found guilty of violating the state financial responsibility laws concerning car insurance, you may find it much more difficult to obtain affordable coverage in the future. Insurance companies can and will run background checks to determine the risk factor of potential clients. Previous failures to purchase insurance can raise the premiums substantially or even disqualify an applicant completely.
There are a few loopholes and exceptions to be found in financial responsibility laws, but a successful defense often requires a very good attorney who is intimately familiar with state laws and procedures. Some charges of driving without insurance can be reduced to driving with a suspended license or being unlicensed. Experts say that the chances of a reduced charge are best when the defendant can prove a short lapse in coverage, typically 30 to 60 days. Judges can be lenient on first time offenders, which could mean a 60-day suspension of driving privileges instead of a full year.
Another possible defense against an uninsured driver charge is the driver's lack of knowledge of the lapsed or invalid coverage. Some insurance companies may cancel a driver's policy without providing sufficient notice. A driver may also argue that the car's owner failed to inform him or her of the car's insurance status. Under most circumstances, ignorance of the law is rarely an acceptable excuse, but it also falls on the state's prosecutor to prove that the defendant did not have insurance at the time of the incident. Without definite proof the vehicle was uninsured, the state may not have enough evidence of an actionable violation.
In short, a number of things can happen if you fail to obtain minimal car insurance, and most of them are bad. You'll be held financially responsible for hospital bills and property damage claims, while simultaneously working off community hours on the weekends and depending on others for transportation to work. If you continue to drive without insurance, each and every law enforcement officer on the street can charge you with a crime, even if you are only stopped at a routine traffic checkpoint. If you plan to operate a motor vehicle on public streets, it is in your best interest to obtain at least the minimal coverage required by state law.
