Cost of an Accident Vs Cost of Car Insurance

The decision to forgo auto insurance and pay for car accidents out-of-pocket is not suitable for a vast majority of drivers. Here's a look at how the costs of maintaining car insurance and paying for damages on your own compare.

The Costs of an Accident

Many factors determine your financial liability following a wreck. For instance, you may live in a state like Illinois where comparative negligence laws mean you could share responsibility for a car crash with another motorist, even if it was partly their fault. With insurance coverage, your policy provider would pay your portion of the damages, but without it, you'd be legally liable.

The circumstances of auto accidents also impact their costs. For example, if you collide with an empty parked car on the side of the road, you'll be held liable for the material damage and have to pay the repair bill. If you hit an occupied vehicle, causing injuries to its occupants, you could be responsible for their medical costs in addition to paying for repairs to the car.

After a car crash, an injured victim can even take you to court over expenses related to the wages they lost while they were recovering and unable to work. Certain forms of auto insurance, like personal injury protection (PIP), can cover these costs under no-fault clauses.

Real World Examples

How much can you expect to pay if you're involved in an accident but lack auto insurance? Each incident is unique, but medical and repair bills may be more expensive than you think.

One 2014 assessment by the U.S. Centers for Disease Control and Prevention found that on average, wrecks cost $3,300 per emergency room visit. More than 75 percent of these costs occurred within 18 months of the original accident. In other words, you shouldn't bank on being able to pay a small amount right after the accident and then washing your hands clean of the matter.

Even more, you don't have to harm someone else to be liable for tens of thousands of dollars. In states like Florida, if might have a PIP auto insurance policy that covers $10,000 of your injury bills. However, once the cost of your injuries exceeds your coverage amount, you'll be responsible for paying the leftover amount, out-of-pocket.

Other Costs of Not Being Insured

If you go uninsured, you may suffer financially even without getting into a car accident. In most states, owning and operating an uninsured vehicle jeopardizes your right to keep its registration. To reinstate your registration, you'll likely have to pay hefty fees and jump through a series of bureaucratic loops.

Going without car insurance also has the potential to raise your premiums when you finally decide to apply for a policy. For instance, regardless of whether you get into a car crash, Texas auto insurance companies can increase your rates if you drove uninsured for more than 30 consecutive days in the 12 months before you applied for coverage.

Some insured motorists have uninsured and underinsured motorist coverage, or UI/UIM, helps them recoup their losses when drivers with insufficient coverage hit them. However, this does not mean you'll get off easy if you happen to be the un(der)insured motorist. In states like Oklahoma, for instance, UI/UIM only deals with bodily injuries. Although the victim's collision coverage should help them repair their wrecked vehicle, they can still come after you for whatever their car insurance doesn't pay.

Why Is It Better to Be Insured?

The factors above make paying for your accidents out of pocket unrealistic. From potentially having to deal with lawsuits to paying for ALL injuries and damages after a crash, getting into a car accident uninsured is financially and emotionally taxing.

Auto insurance does more than just pay for damage. It also serves as a critical buffer between you and other parties. When people don't like their settlements, they're more likely to sue your insurance company instead of suing you. All in all, staying covered makes it easier to move on with your life after a car accident.