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Every state has laws that govern minimum liability car insurance requirements, but automobile self-insurance is a way around buying car insurance if you read the fine print. However, the process of getting automobile self-insurance isn’t as easy as it sounds.

If you’re considering self-insuring your vehicle, you should compare the cost of your effort with the cost of a traditional auto insurance policy from the best car insurance companies to be sure you’re making the right choice.

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What Is Automobile Self-Insurance?

Automobile self-insurance is the concept of effectively insuring your automobile yourself rather than purchasing a traditional car insurance policy. Automobile self-insurance is not legal in every state and often requires the owner to self-insure multiple automobiles.

You’re probably already more self-insured than you think in some aspects of your life. Anytime you buy something without an insurance policy to cover risk, you’re self-insured.

When it comes to automobile self-insurance, you can avoid getting car insurance in select states in two ways:

  • By making a cash deposit with the Department of Motor Vehicles (DMV) or state Department of Insurance
  • By purchasing a surety bond

Basically, you will submit proof of your net worth to prove that you have enough cash reserved to pay for any bodily injuries or damages in the event of an accident. No matter the means by which you prove you’re self-insured, the amount of money you set aside in your bank account for your car insurance must be more than the amount that the state requires for car insurance.



Which States Allow Automobile Self-Insurance?

Only some states allow drivers to have automobile self-insurance. Others don’t issue certificates of self-insurance at all. Further, some states only allow it if you own a fleet of vehicles.

We obtained data from the Property Casualty Insurers Association of America, as well as state insurance and motor vehicle codes, so we could tell you which states allow automobile self-insurance. We’ll also go over state requirements for how much money motorists must post in bonds or other means to show proof of financial responsibility.

You can only get a self-insurance certificate for a small number of cars in the following 10 states. Other states only permit automobile self-insurance if you own many vehicles.

  • Alaska
  • Connecticut
  • Georgia
  • Hawaii
  • Indiana
  • Maryland
  • New Mexico
  • North Dakota
  • Pennsylvania
  • Vermont

Here’s a list of all of the states that allow automobile self-insurance and the amount of cash that each state requires drivers to reserve in the form of a bond, cash deposit, or – in South Dakota – securities. Most of these states require you to own a high number of vehicles to be eligible for automobile self-insurance. Some require 25 vehicles or more.

StateCash Required
New Mexico$60,000
New York$25,000
North Carolina$85,000
Rhode Island$75,000
South Carolina$35,000
South Dakota$25,000

Alaska And New Hampshire

Alaska and New Hampshire are special cases with car insurance, however.

Alaska doesn’t require select residents who live in low-traffic-volume areas or on land that is not connected to a major highway to carry car insurance. These residents only have to find means of self-insurance or car insurance if they have been cited for a traffic violation in the past five years.

New Hampshire, on the other hand, is the only state that doesn’t require residents to carry car insurance. Drivers do have to show proof of financial responsibility in the event of an accident, though.



When Is Automobile Self-Insurance Right For Me?

When you’re trying to figure out if automobile self-insurance is the right step for your protection on the road, ask yourself if you have the means to comfortably pay for a bad situation. If you are involved in an at-fault car accident with injuries and property damages, will you be able to pay and have enough money left after the accident to take care of yourself and your family?

Here’s a breakdown of when you might choose to use automobile self-insurance or traditional insurance.

Automobile self-insurance may be right for you if...Traditional insurance may be right for you if...
You have a lot of carsYou only have one car
You have enough money to cover the costs of injuries and damages in an at-fault accidentYou need more insurance coverage options than basic liability insurance
You live in a state that permits automobile self-insurance

It’s important to understand the laws about automobile self-insurance in your state before you start depositing cash or submitting bonds as proof of insurance. To find out about your state’s laws, contact your DMV or Department of Insurance.



Automobile Self-Insurance Vs Driving Without Insurance

If you are looking into automobile self-insurance because you’re having trouble making your car insurance payments, you probably won’t find what you are looking for.

We recommend avoiding driving without insurance because the legal repercussions can be severe. States have different penalties for driving without insurance. Some of the legal penalties for driving without insurance include:

  • Suspension of your driver’s license, registration, and vehicle plate numbers
  • Community service hours
  • Jail time

It’s better to purchase a traditional car insurance policy from a provider with minimum limits. Here are some ways to save money on a traditional car insurance policy:

  • Choose to pay a higher deductible to lower the price of your insurance premiums.
  • See if your auto insurance provider offers usage-based insurance programs.
  • See if your car has safety features like anti-lock brakes or passive restraints that could qualify you for a discount.
  • Bundle your auto insurance with other products like home insurance or life insurance to get discounts on both.
  • Ask your agent about other discounts that you could be missing out on.
  • Shop around for better car insurance rates annually.
  • Tell your insurance company about any major life changes.

We recommend shopping for car insurance quotes every six to twelve months. That’s because a lot can happen in a year. You could buy a new home, get married, have a child, or move, and your coverage needs and the discounts you qualify for could change too.



Recommendations for Car Insurance

If you’re looking to compare the cost of self-insurance with that of a traditional policy, we recommend getting quotes from a few different companies.

Geico Insurance: Best Discount Availability

We recommend Geico for its extensive coverage, affordable prices, and variety of discounts. Standard coverage is available, plus add-on types of coverage like mechanical breakdown insurance and roadside assistance. Geico partners with many professional and academic associations to give certain members discounts on car insurance, and there are discounts for things like being a good student and being a safe driver.

Read more: Geico insurance review

Progressive Insurance: Best for High-Risk Drivers

After doing our homework, we think Progressive is the best option for high-risk drivers, including drivers in their 20s and those with DUIs in their driving history. Progressive has advanced tech, including the Name Your Price tool that uses the price you want to pay to match you with budget-friendly car insurance plans. Plus, Progressive has the usage-based Snapshot program that assesses safe driving habits with a mobile app to help you save money on car insurance.

Read more: Progressive insurance review

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