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Auto insurance laws vary from state to state, but all states require some type of car insurance or proof of financial responsibility. It may seem like an extra cost, but actually car insurance protects you, your family and your vehicle if you’re in an accident or if your vehicle is damaged. In general, state car insurance laws may require some level of the auto coverages listed below. For more information about car insurance policies state-by-state, visit our state auto insurance page. Bodily injury liability Liability Insurance covers injuries that you, the designated driver or policyholder, cause to someone else. You and family members listed on the policy may also be covered when driving someone else’s car with their permission. Medical payments or personal injury protection (PIP) State car insurance laws typically require medical coverage that pays for the treatment of injuries to the driver and passengers of the policyholder’s car. PIP may cover medical payments, lost wages or other costs resulting from an accident. Property damage liability This auto insurance coverage pays for damage you (or someone driving the car with your permission) may cause to someone else’s property. Besides vehicle damage, it can include damage to lamp posts, telephone poles, fences, buildings or other structures your car hits. Collision coverage This coverage protects you in the event your car is damaged in a crash with another vehicle or object, or in the event the vehicle flips over. Collision insurance may also cover damage caused by potholes in the road. Comprehensive coverage Comprehensive coverage reimburses you for loss due to theft or damage caused by something other than a collision – such as fire, falling objects, earthquakes, windstorms, hail, floods, vandalism or contact with animals. States actually don’t require you to purchase collision or comprehensive coverage. But if you have a car loan, your lender may insist you carry it until your loan is paid off. Uninsured and underinsured motorist coverage This coverage is to reimburse you, a member of your family or a designated driver for damages incurred if one of you is hit by an uninsured or hit-and-run driver. Underinsured motorist coverage comes into play when an at-fault driver doesn’t have enough insurance to pay for your total loss. This coverage may also protect you if you’re hit as a pedestrian. To make sure you’re meeting your state’s insurance law requirements, get an auto insurance quote or work with an insurance agent near you and make sure you have the right level of coverage.


When money is tight, everyone looks for ways to cut back. One temptation is to let your car insurance expire, even for a short period of time. This really isn’t a great idea, because a car insurance lapse can cause you some unexpected problems. Here are several reasons it’s important to stay protected and avoid a lapse in coverage: 

Legal requirements

Most states require some level of auto liability insurance. This is the coverage that pays for the other person’s medical needs or property damage from an accident, if you’re at fault. So if you own a car and you’ve allowed the liability insurance on it to lapse, you might be violating the law – even if the car is parked and not driven. If you drive the vehicle and cause an accident without being covered, you’ll be cited and subjected to stiff fines or worse.

Financial consequences

Driving without car insurance is risky. If you’re responsible for an accident and don’t have insurance, you may be sued to pay for the damages – and end up paying for everything, including the lawyer, out of pocket.

Insurance rate increases

After a car insurance lapse, you may find it harder to get insurance at an affordable rate. You may even have to resort to a company that specializes in risky drivers – which is almost never a good deal, since high-risk insurers charge more for their policies. 

Driving record impact

In some states, auto insurance companies are required to notify the Bureau of Motor Vehicles when you drop insurance or change companies. So once you have a lapse in car insurance, it may be noted on your driving record. In some cases, your car could even be seized or your license suspended. 

How to avoid a lapse in coverage

By now, the benefits of keeping your car insurance active should be clear. Your ultimate goal should be to keep your car insurance coverage affordable and compliant with state laws. Your best resource for keeping you insured and protected is your local agent. They are also the person to turn to if you do end up with a lapse in coverage.

Practice responsibility

Car insurance policies are cancelled for two main reasons: non-payment and driving offenses. As a vehicle owner, you are responsible for consistently paying your car insurance premium. You are also responsible for driving safely; too many tickets or accidents on your record can cause an insurer to cancel your policy, resulting in a lapse in coverage.

Discuss affordable coverage options

Talk to your insurance provider about any discounts you may be eligible for that can help keep your premiums affordable. Nationwide members can also schedule an annual On Your Side review, which assesses your current coverage and is an opportunity to adjust or update your policy based on your needs. In the event a lapse has already occurred, some providers may also be able to reinstate your lapsed insurance if the policy has only been inactive for a few days.