When you have a tight budget, you might be tempted to get by without auto insurance to help you make ends meet. But unfortunately, forgoing insurance will put you in a potentially catastrophic financial position in addition to a dangerous legal situation.
You might discover that car insurance doesn’t cost as much as you expected with a little effort. Read on to find out your options for getting coverage without a car insurance down payment and finding cheaper insurance. Then, if you still can’t afford a car insurance policy, we’ll show you what alternatives might be best for you.
Car Insurance Options Without a Deposit
What is a car insurance deposit, anyway? As it turns out, car insurance companies don’t demand a deposit like what a landlord might require before you move in. Before you can move into a rental home, the landlord will probably need a deposit that will be returned to you when you move out as long as you paid your bills and kept the house in good condition.
Many people assume that car insurance companies require a similar deposit, but they don’t. Instead, customers have to prepay for car insurance coverage. So, when you make your first payment, you’re paying for the coverage that you’ll have for the next month.
No insurance company will provide you with coverage if you haven’t paid for that protection. If they did, people would sign up for coverage, change insurance providers before making their first payment, and continue that cycle.
Even though it’s a matter of semantics, you have a wide variety of options for car insurers who don’t require a deposit. However, you have no options for car insurance providers that don’t require prepaid premiums for coverage.
Ramifications of Skipping Car Insurance
You’re breaking the law if you skip car insurance because you can’t afford it. If you get in an accident or get pulled over, you’ll be in legal trouble.
Legal Trouble for Driving Without Insurance
You should expect to get a ticket, which will be costly, and be prepared to have your license suspended until you show proof of insurance. It would have been better to buy insurance before driving because then you’d at least skip paying for a ticket.
Liability Costs Following a Crash With No Insurance
The legal trouble isn’t even the worst of it, though. If you cause an accident and don’t have insurance, you’re still liable for the damage. For example, suppose you run a red light and crash into a new $50,000 SUV, resulting in a total loss. In that case, you’re responsible for covering the loss of a $50,000 vehicle in addition to injury costs which could be even more expensive.
Driving without insurance isn’t worth the risk. One accident could hurt your financial situation for the rest of your life.
How to Find Cheaper Car Insurance
The state where you live has a minimum level of liability coverage that all drivers must purchase. The cheapest kind of policy you can get is for those minimum coverage limits. Unfortunately, those limits don’t reflect the realistic damage costs of a crash.
If you cause an accident and the damage exceeds your insurance limits, you’ll be responsible for paying the difference out of pocket. Sticking with minimum insurance isn’t advised, but read on for a few good tips on reducing your insurance rates.
Shop Around for Car Insurance
Comparing quotes is one of the easiest and best ways to save money on car insurance. Not every company is a good fit for every individual. Check out several companies to see how much you could save just by switching providers.
Sometimes, changing some lifestyle habits to make a tight budget work can be enough to make car insurance affordable.
Drop Full Coverage
While carrying only the minimum liability limits isn’t a good idea, having only liability coverage might be appropriate for your situation. If your car is older than 10 years old, it’s probably time to evaluate if you need first-party coverage anymore.
Just remember that if you drop full coverage and wreck your car, your insurance provider won’t pay for those damages.
If you opt for liability-only coverage, make sure your limits are high enough to cover a realistic crash. For example, you should probably carry at least $100,000 for personal injury liability for one person hurt in a crash, $300,000 for multiple injuries, and $70,000 for property damage liability.
Look for Discounts
Even if you have looked for discounts before, look again. Changing circumstances in your life may make you eligible for more discounts.
One of the most popular discounts is for combining home and auto insurance. Of course, it doesn’t always make sense, but for many people, the savings on both lines of coverage make it worth purchasing home and auto insurance from the same company.
Increase Your Deductible
You don’t have a deductible for liability insurance, but you’ll almost always have to pay a deductible if you carry full coverage. The higher your deductible, the lower the premiums you’ll have to pay.
You must understand that your responsibility is the deductible if your car is damaged. Insurance will cover costs beyond that. So make sure your deductible is set at an amount you’ll be able to pay if needed.
A good driving record will help you pay the lowest premiums. Most insurance companies look back at least three years on your driving record. If you’ve received multiple traffic tickets, been involved in a crash, or filed an insurance claim, your rates will be higher.
Use Telematic Programs
Some car insurance companies offer a program that tracks your driving habits and rewards you with lower rates for good behavior. Unfortunately, this program isn’t always without risk. Some insurers will raise your rates if they detect dangerous behaviors.
So, before signing on, make sure you’re confident you’ll qualify for lower rates based on how you drive.
Alternatives to Paying for Car Insurance
If you can’t make it work financially to pay for car insurance, you can’t drive. Thankfully, there are some excellent alternatives.
Use Ride Share Services
Taking a ride in an Uber will cost more than driving yourself. However, when you consider all the other costs involved with driving, you may discover that if you only need occasional rides, you could save a lot of money by getting rid of your car and instead, hailing your rides.
Use Public Transporation
Not all areas of the country have public transportation as a viable option. Still, if you live in a major metropolitan area that does, like New York City, Philadelphia, Washington D.C., or Chicago, among others, you can get just about anywhere you want using public transportation.
Rent a Car When Necessary and Buy Insurance Through the Rental Company
Suppose you can get by without a car for everyday travel but still need to be able to drive occasionally. In that case, you might consider renting a car when necessary and purchasing car insurance provided by the rental agency.
The bottom line is that you can’t get insurance without paying for it first, but you may be able to find ways to make your premiums affordable. And if you can’t, there are cost-effective transportation options that can get you where you need to be.