What Might Happen if You Don't Have Car Insurance

I had a few short stretches of not having car insurance, but I've stayed insured continuously for the last 15 years. Car insurance is a necessary expense to cover damage and injuries in accidents, and for all the days you don't get into accidents, it pays for peace of mind.

A few years ago, my friend Alex got into a car accident. She wasn't insured and she was at fault. It all unfolded just like you probably think it would. Her story is below. I hope this doesn't destroy your peace of mind.

In California, it is illegal to drive without car insurance.

Alex's Story
I moved to Sacramento in 2004, after having left a car in Canada, I was reliant on public transportation. It was impossible to get everywhere I wanted to go since I lived in relatively new suburb of North Natomas.

I needed a car but at 22 had zero credit. After about a year here, my parents bought two new cars and gave me their old one. The “old one” was a 2000 four-door Honda Civic, a reliable mom car. I was happy to have it and the freedom it allowed me. Unfortunately, that didn’t last very long. After just a month, I was rear-ended on Garden Highway and my car was totaled. The car was still on my parents' insurance, so I didn’t suffer but I also didn’t receive any money for a new car.

I was back to square one, but my parents knew I needed a car in this city and encouraged me to apply for a car loan which they agreed to cosign for. I went car shopping and decided on a 2003 Honda Civic LX. It was my first real adult purchase and I took so much pride in ownership. I had the car for a few years and maintained regular loan & insurance payments and maintenance while I was working full-time. At a point, I decided I needed to go back to school and work part-time. When I did this, I put myself into a rough spot financially. I sought cheaper insurance and found that if I had a high deductible, I could pay less every month. I had no idea where that would lead me and what all the coverage was for, but I had it.



Around this time, I was backing out of a parking spot in the rain, not paying attention, I hit a pole that crushed the front right side of my bumper. It was ugly, but I could still drive and because my deductible was so high, I didn’t file an insurance claim to have it fixed. We went to an auto body shop to get an estimate and it was way too expensive, so I left it as is for close to two years. I started a new job and added a new phone bill as well as a few credit cards to my life. I was barely making ends meet working close to full-time and still going to school part-time. I had paid for a six-month policy and when it ran out I didn’t renew. I didn’t feel like I had any extra money to spare for car insurance. I thought I was a good driver, with no at-fault accidents and that nothing would happen. I was uninsured for three months when the worst happened.

The Crash
I was driving on Howe Ave to meet a friend at Tupelo on a rainy Sunday night in January 2010. I was in the far right lane behind two other cars. The lead car kept braking and the car in front of me was not. I was being cautious since it was raining and I needed new tires pretty badly. I had slowed down and then accelerated as the lead car unexpectedly braked and turned into the parking lot of the Jack In The Box. The car in front of me couldn’t brake fast enough, and reacted by moving into the center lane at the same time that I did. I was shoulder checking and when I looked back she was right in front of me. I tried to brake but it was slippery and I couldn’t stop fast enough. I hit her hard enough that my airbags were deployed and I hit my arm pretty hard on something. The smoke from the airbags filled my car and I couldn’t see what was going on around me. A pedestrian on the sidewalk ran out and helped me move my car out of the road into the parking lot. My whole front end was smashed, but the other car only had damage to the rear bumper. The other driver was around my age with a similar aged passenger. She called her dad and he told her that as long as we were okay and exchanged information we didn’t need to call the police.

We exchanged info, and although I didn’t have insurance, I gave her my expired insurance card. They both seemed okay, and honestly seemed more concerned for how I was doing. We talked briefly and they waited until I had a friend on the way before they left. My car was not drivable and I was experiencing a pretty sharp pain on my left side, and my right arm was swollen and sore. My friend arrived and immediately took me to the hospital.

I was at the hospital for about four hours before being released with instructions to come back if the pain persisted. I was sore and in shock, but suffered no major injuries.

The Aftermath
The following days were kind of a blur, but they were filled with phone calls with her insurance company and the practical issues of seeing if my car was salvageable. I completed an accident report with the police and got in contact with my auto loan company. It was pretty quickly determined that my car was totaled. Since I was uninsured and I had violated the terms of the loan, I was responsible for the balance of my loan immediately.

I owed roughly $9,000, which I did not have. My parents had cosigned my loan, so this affected their finances as well. They were forced to take out a new loan to pay it back, which I was then responsible to repay. It was determined that the other car, a Nissan Altima, was also totaled.

I started receiving facebook messages from the driver wanting to discuss my lack of insurance and her need for money and a new car. At first, they claimed that the passenger had suffered some injuries but eventually let that go. It took awhile to determine everything, but finally I received a letter for subrogation of $6401.39. Again, my parents paid that off and I now owed them a total of $15,401.39, a staggering number considering I had purchased my car for $15,922 five years prior.

The Legal Ramifications
In the state of California, the punishment for having an accident while uninsured is an automatic one-year suspension of your drivers license. The accident was in January, but my license was not officially suspended until five months later, in May 2010. In order to have my license reissued, the state required a $55 fee, plus proof of financial responsibility, plus trips to Superior Court to pay tickets associated with the accident and a prior fix it ticket. I have not had a car since my accident and am not sure when I will again. It was the most expensive, stupid mistake of my life…all because I didn’t think I could afford $80 a month for car insurance.