If you’re caught driving without insurance (or an up-to-date policy), you could temporarily lose your license, receive a traffic ticket, and face a large fine, depending on your state’s laws.
The chances of this happening might be stronger than you’d think. One in 8 drivers don’t have insurance, according to a 2017 study by the Insurance Research Council. Plus, some states either don’t require you to have insurance or offer alternatives.
Here’s what to do if you find yourself on the hook for hundreds or thousands of dollars in damage after being in a car accident without insurance.
Beware getting into a car accident without insurance
If you’re in a car accident without insurance, it’s important to know what to do at the accident scene and what to do in the aftermath.
If you damage your car or suffer an injury from an accident, you could be left dealing with auto repair and medical bills.
Some states have “No Pay, No Play” rules, meaning that if you don’t have insurance, you can’t collect money in certain instances — even if the accident wasn’t your fault. The situation gets pricey when you’re at fault and the other driver suffers an injury or damage to their car.
If their bumper suffered a minor scratch or dent, you could work out payment yourselves and avoid filing an auto insurance claim. But in more serious accidents, the insured driver could pin their costs on you. That’s because many states hold the at-fault driver responsible.
Without a policy, you could be asked to pay thousands of dollars to make the other driver (or their insurance company) whole. You’d be wise to consult an auto insurance specialist or car accident attorney to examine your options.
If you live in one of a dozen states offering no-fault insurance, you could be off the hook for the other driver’s costs. In these states, the driver would be required to lean on their insurer to cover their costs. They likely wouldn’t be able to sue you for damages in most cases.
How to cover the costs of a car accident without insurance
When you’re facing a stack of bills after a car accident, there are ways to pay them without ruining your finances.
Figure out exactly how much money you need for only the most necessary expenses after the car accident. You would prioritize paying another driver’s insurance company over touching up your car’s paint job.
Once you have a list of amounts owed, set a timeline. If another driver’s insurance company billed you $1,000, ask about the due date. You can also look into negotiating a payment schedule.
Check your budget to see if you could cover these costs by the required due date. If you work out a schedule for your bills, you could set aside part of your monthly income. You could also start a new side hustle to generate extra cash if there’s enough time.
Consider borrowing to pay for your car accident costs
Only after looking for room in your budget and squeezing some savings out of your paycheck should you consider borrowing money to cover your car accident costs.
You could borrow money from family members, but that could come with its own set of challenges, including straining relationships. If that’s not an option, an unsecured personal loan is a possibility.
Offered by banks, credit unions, and top online lenders, an unsecured personal loan could net you the amount of money you need without putting up any collateral in the process.
You would be quoted an interest rate and repayment term on your loan amount after the lender has reviewed your credit history and debt-to-income ratio, among other factors. The stronger your application, the better loan terms you could secure.
Without a cosigner, a lender could hand you a high interest rate that makes your repayment plan more difficult or more costly.
Say you need to borrow $15,000 because of a serious car accident, and your excellent credit qualifies you for a 6.00% APR. With a five-year repayment term, your monthly payment would be $290, and you’d pay $2,400 in interest.
Now say your so-so credit instead nets you an APR of 12.00%. In that case, your monthly payment would balloon to $334, and you’d shell out $5,020 in interest.
Even if you’re considering borrowing a much smaller amount, avoid resorting to quick fixes such as risky payday loans.
With higher interest rates and shorter repayment terms than personal loans, you could find yourself in another jam. After getting into a car accident with no insurance, you should avoid fixing one mess by creating another.
Once you settle up, consider buying the right amount of insurance to protect you and your car in the future.
Interested in a personal loan?Here are the top personal loan lenders of 2018!
|Lender||Rates (APR)||Loan Amount|
|1 Includes AutoPay discount. Important Disclosures for SoFi.
2 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
* Important Disclosures for Upgrade Bank.
Upgrade Bank Disclosures
|7.73% – 29.99%||$1,000 - $50,000|
|6.15% – 15.37%1||$5,000 - $100,000|
|6.87% – 35.97%*||$1,000 - $50,000||Visit Upgrade|
|8.00% – 25.00%||$5,000 - $35,000|
|4.99% – 29.99%||$10,000 - $35,000||Visit FreedomPlus|
|5.99% – 18.99%2||$5,000 - $50,000||Visit Citizens|
|15.49% – 34.49%||$2,000 - $25,000||Visit LendingPoint|
|5.99% – 35.89%||$1,000 - $40,000||Visit LendingClub|
|5.49% – 18.24%||$5,000 - $75,000||Visit Earnest|
|9.95% – 35.99%||$2,000 - $35,000||Visit Avant|