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The penalty for driving without insurance varies from state to state. In some states, your vehicle tag can be seized and your car impounded. In addition, some states impose heavy fines for those who drive without auto insurance. Limited sates fine a fee of $150 to $500 for driving without insurance.

The consequences can be far more serious if you are involved in an accident and do not have insurance. You may have to comply with the financial responsibility laws (SR22, SR22s, SR16) including having to pay for any injuries or damages out of your own pocket.

CarInsurance.com understands that state complacency allows for states to not uphold the laws of the land. As you will understand from our comments, the states don’t consider this offense as a serious offense.

For every dollar you pay in insurance premium a portion goes towards those states that aren’t aggressive toward uninsured drivers.

GAP insurance can provide valuable protection during the early years of your car’s life if you have a loan or a lease.

If a loss occurs, GAP insurance will pay the difference between the actual cash value of the vehicle and the current outstanding balance on your loan or lease. Gap Insurance protects your vehicle lease or loan. Sometimes it will also pay your regular insurance deductible.

If your vehicle has been totaled by accident, theft, fire, flood, tornado, vandalism, or hurricanes your insurance company typically pays the actual cash value. That may be less than its actual retail value. It is often considerably less than the actual amount you still owe on your loan or the amount due for a lease payoff.

The amount between your insurance deductible and the loss from this financial shortfall is the “gap” you can be left owing.

CarInsurance.com offers GAP Insurance through an online partner.

This is how a “GAP” occurs (using fictitious numbers):

• You choose a car that costs $25,000 and you drive it off the lot.

• After paying the down payment you owe $24,000 in car payments over 5 years (0% interest loan = $400 car payments).

• You purchase physical damage insurance (comprehensive and collision) with a $500 deductible to protect you against damages and loss.

• You have an accident while you are still upside down on your loan or lease (”Upside down” means owing more on a car than it’s worth) and your vehicle is totaled.

• The insurance company determines that the actual cash value of the car is only $22,000, but at the time of the loss you still owe $23,500.

• GAP insurance should pay the difference plus your deductible totalling $2000. (Not all GAP policies pay the deductible)

Here are the line items:

• Loan Payoff at the time of accident: $23,500

• Vehicles actual value at the time of accident: $22,000

• Your deductible: $500

• Physical Damage Insurance Company pays: $21,500 ($22,000 minus $500 deductible)

• GAP insurance pays the difference between what is owed and what the Physical Damage Insurance Company pays (plus your deductible): $2000

Typically a new car is worth approximately 30 percent less in 3 months than the day it was purchased! In our example above, if you owned the car for 3 days, had physical damage coverage and the car was totaled, you could owe 20% to 30% of the $24,000 ($4,800 to $7,200 out of your pocket) even though you purchased “full coverage.”

Car owners often assume that if their car is totaled, it will be replaced at the amount they paid, or at least the amount they owe. This is not so. Many car insurance companies offer a GAP option (Loan/Lease Gap Insurance) as an optional coverage that is available with physical damage coverage. If you carrier doesn’t offer it, you can purchase it here: CarInsurance.com offers GAP Insurance.

Remember these possible exclusions/policy rules:

• Maximum Limit of Loss: $50,000

• A GAP claim settlement may not cover the entire gap due, when your loan’s Original Amount Financed exceeds 120% of MSRP (new vehicle) or NADA Retail Value (used vehicles), plus 30% of Value allowable for Additional Financed Items like Credit Life or Service Contracts.

• The claim settlement does not cover late charges or other penalties due to your lender.

• Your loan amount financed must be less than or equal to $100,000.

• Your loan term must not be greater than 84 months.

• The loan must not have a balloon payment due at the end of the term.

• The maximum APR is 12.5%

Source: CarInsurance.com

When your car is totaled, the insurance company has an obligation to “make you whole,” as that is defined in the policy.

Most policies value your vehicle using Actual Cash Value. “Actual Cash Value” means replacement value less depreciation.

This essentially means you have to be left in approximately the same financial position (with respect to the item insured – not in respect to any liens or leases that hold title to your car) you were in before the accident.

If you have physical damage coverage (comprehensive and collision) the insurance company will typically write you a check for the actual cash value of the vehicle, minus any deductible on your policy. If you are “upside down” on your loan or the cash value is less than your current loan amount (”Upside down” means owing more on a car than it’s worth.) then you should consider GAP insurance. In this situation, if you don’t have GAP insurance then you would be responsible toward your loan for the remaining balance. The terms of that payment are set through you loan contract.

Source: CarInsurance.com

Each infraction such as moving violations, parking tickets, at-fault accidents, or driving under the influence, is assigned a certain point value. When you are found guilty of one of these infractions, the appropriate number of points is added to your driving record. The more points you have, the worse your record. Each insurance company has its own method of evaluating applicants, so the points on your driving record may or may not have a direct impact on the rates you pay for auto insurance.

A point system is simply the assignment of “points” or values to each infraction. Then, the rating system of the insurance company evaluates the “points” instead of each infraction. For example, a company may use this type of system:

Comment Followup: Because each insurance company has a different (complex) rating algorithm there is no set dollar amount or rating point comparison that can be given. If you want to find the specifics for your insurance company, their rates are filed with the state’s department of insurance. You can request a copy of those rating factors and how they affect the companies’ specific rates. It is very complex and not for the faint of heart.

Typically, you can expect the company rating algorithm to try to put an insurance point value on each infraction (regardless of the state driving record point system). Based upon that point value a different rating factor is use to either raise or lower the rate. Again, it is different for every company. Some companies rating algorithms are much more complex and some are simple.

Source: CarInsurance.com

If it was your first ticket, you might not see any change in your rates. Some states have laws governing when and why auto insurers can change policyholders’ premiums; often, insurers are not allowed to raise your rates after just one speeding ticket or other citation.

Different companies have different practices when it comes to raising premiums. Some companies will consider the severity of your violation and raise your rates accordingly; others will raise rates a specific amount per violation.

Because there are too many factors to simply say it will be $50 more a year, here is a real example:

The average New York auto insurance policy costs $1313 a year.

If you have a clean driving record then most New York companies offer a discount. That discount is typically a 25% savings ($328). So, using these averages a driver with a clean driving record is paying $985 a year for car insurance.

One speeding ticket would remove that discount and increase the base rate by 2%. That is a $354 increase a year, or $1062 over 3 years (companies usually surcharge for 3 years).

Source: CarInsurance.com

In most cases, the less expensive the car is to buy, the less expensive it is to insure.

In addition, domestic vehicles are usually less expensive to insure as are 4 door cars, 4 cylinder motors and minivans.

According to leading car retailers, these cost the least to insure in the first 5 years of ownership:

• Chrysler PT Cruiser 4dr Wagon

• GMC Safari SLE AWD 3dr Minivan

• Dodge Caravan SE 4dr Minivan

• Saturn ION 1 4dr Sedan

• Pontiac Sunfire 2dr Coupe

• Jeep Liberty Sport 4WD 4dr SUV

• Saturn L300 1 4dr Sedan

• Volvo S40 4dr Sedan

• Saab 38600 Linear 2.3t 4dr SportWagon

• Buick Century Special Edition 4dr Sedan

Good luck and happy car shopping. You can obtain as many quotes for as many different vehicles as you’d like at our web site. Enter your zip code and then some basic information for a quote. You can select different types of vehicles on the vehicle page to compare the difference in the rate.

If you are looking for an older vehicle then you should still use the same reference that a less expensive car to purchase is less expensive to insure.

Most safety experts caution against SUVs for teens. Young drivers tend to overcorrect when steering out of fear, this makes them more prone to roll their vehicles.

You should look for these factors on an older car:

• reliability

• safety

• price

Small cars, such as the Honda Civic, the Ford Focus and Saturn models are the most popular choices, but they aren’t always the best choice for young drivers. The lightest vehicles have the highest death rates.

If you can stand it, minivans and large four-door cars have the lowest death rates. Insurers use these factors when considering your rate. The bigger and heavier car is a smarter choice for young drivers, even if it isn’t cool.

Comment Update: We get many requests for exact numbers. Young drivers should understand that many factors affect your rates. We can give you numbers, but they will be different in every different locale throughout the United States. Here are some 6 month premiums with no tickets in different parts of Florida:

Central Florida:

• Bodily Injury 10000/20000 — $546

• Property Damage 10000 — $534

• Personal Injury Protection 1000 — $386

• COVERAGE 2002 MITSUBISHI ECLIPSE SPYDER GT

• Comprehensive 500 — $84

• Collision 500 — $1,016

• Policy Total — $2,566

South Florida:

• Bodily Injury 10000/20000 — $880

• Property Damage 10000 — $580

• Personal Injury Protection 1000 — $634

• COVERAGE 2002 MITSUBISHI ECLIPSE SPYDER GT

• Comprehensive 500 — $387

• Collision 500 — $1,598

• Policy Total$4,079

Put your zip code in the quote box above and find out how much your area costs to insure a 16 year old.

Source: CarInsurance.com

Please refer to the updated date below to see the last time this answer was updated. The requirement for PIP expired on on October 1st. Florida became a tort state in accidents IF all parties don’t have PIP coverage. Until January 1, 2007 lawmakers say, no-fault will continue to apply only when all drivers in an accident have PIP coverage.

The bill to restore Personal Injury Protection, also referred to as no-fault or PIP passed the House, 105-4, early Friday (October 5, 2007) and later in the day was passed unanimously by the Senate. Governor Crist signed the bill into law October 11, 2007. The bill to reinstate PIP will take effect January 1, 2008. These are the items to note with the NEW law:

• Requires all vehicle owners to have personal injury protection by Jan. 1. Insurers must send premium notices by Nov. 15 to policyholders who do not already have PIP coverage.

• Provides additional time for PIP insurers to respond to a demand letter for payment before a suit may be filed.

•  Requires that all PIP claims related to a single provider for the same injured person be joined in a single lawsuit.

• PIP will still have 80% medical bill coverage or the 20% co-pay.

• New restrictions on the types of clinics that can bill PIP (this will help prevent fraud).

• A new fee schedule capping what most health care providers can charge to 200% of the Medicare reimbursement rates (this will help prevent fraud).

• A new provision allocates $5,000 for doctors who administer emergency and hospital care. This requires insurers to reserve $5,000 of benefits for 30 days for physicians providing emergency services or care or inpatient hospital care.

• New uniform PIP claim documentation requirements for PIP claims (this will help prevent fraud). Mandates the consolidation of perfected claims from one health care provider relating to the same patient and the same insurance company.
  We will explain this in future Car Insurance Question and Answer sessions. 

• New authority for the Florida Attorney General’s office to sanction insurance companies that wrongfully deny claims. This will protect consumers. Makes it an unfair trade practice for an insurer to refuse to pay valid claims as a general business practice, and allows the attorney general to investigate and initiate actions, in addition to the Office of Insurance Regulation.

There will be no requirement for drivers to have PIP between October 1, 2007 and December 31, 2007. Drivers will still be required to carry Property Damage Liability and it is strongly recommended to carry Bodily Injury Liability while Florida is a tort state. In the interim, if there’s an accident and any driver involved doesn’t have coverage, there will be the possibility of a lawsuit to determine who is at fault to determine who will pay damages. That is where Bodily Injury Liability, Uninsured/Underinsured Motorist Bodily Injury and Medical Payments/Expense would be necessary.

Many drivers that purchased policies prior to October 1st, will continue to have the coverage in the interim. PIP coverage could still cover injuries, but drivers won’t have protection from a lawsuit if they’re in an accident with a driver without PIP. That is why you need to have Bodily Injury Liability and Uninsured/Underinsured Motorist Bodily Injury coverage.

CarInsurance.com has a number of contingency plans and options available for you when you shop for insurance coverage with our agency. When you get a Florida car insurance quote we guide you through the coverage options with and without Florida no-fault coverage. Now that the Florida leadership has made a decision, CarInsurance.com carriers will offer coverage to protect you in the interim and then have the new required PIP in place for January 1st. Some carriers will continue to require PIP to remain on your policy and/or only sell policies with PIP on them. This is because of the confusion created by the state; the carriers want to make sure their customers are covered properly.

Source: CarInsurance.com

SR-22 insurance varies state to state.

The basic definition of an SR-22 form is available on our Insurance Terms page.

SR-22 isn’t a type of insurance, but rather proof that you have certain types of insurance (based upon the financial responsbility laws of your state).

Simply, it is a form which must be filed by the insurance company to the state (Department of Motor Vehicles) stating that auto liability insurance is in effect for a particular individual.

Typically it is required when insurance is provided to an individual who was in an accident or was convicted of a traffic offense and was unable to show financial responsibility OR if a judge has ordered an SR22 for other reasons (in some states).

Comment Update: Yes, it is simply a form showing you are carrying a certain type of liability coverage.

Please review our related question titled “What is an SR-22?“ for more explanation to your request.

Source: CarInsurance.com

What is required to apply and obtain a driver’s license differs from state to state so you will need to contact your local Department of Motor Vehicles or like state agency.

For example in Florida the HSMV notes that if you are age 18 or older you should bring the following to obtain a FL driver’s license:

• United States Citizen proof of identity.

• Non-United States Citizen proof of identity.

• Social Security number, if issued Chapter 322, Florida Statutes, requires the Department to collect social security numbers for the issuance of driver license and identification cards.

• Proof of completion of a Traffic Law & Substance Abuse Education Course or license from another state, country, or jurisdiction.

If you are under the age of 18:

• United States Citizen proof of identity.

• Non-United States Citizen proof of identity.

• Social Security number, if issued Chapter 322, Florida Statutes, requires the Department to collect social security numbers for the issuance of driver license and identification cards.

• Proof of completion of a Traffic Law & Substance Abuse Education Course or license from another state, country, or jurisdiction.

• Parental Consent Form – must be notarized or signed in the presence of a driver license examiner.

In California if you are over 18 then to apply for a driver’s license you will need to do the following:

• Visit a DMV Office

• Complete application form DL 44 (An original DL 44 form must be submitted. Copies will not be accepted.)

• Give a thumb print

• Have your picture taken

• Provide your social security number. It will be verified with the Social Security Administration while you are in the office.

• Verify your birth date and legal presence

• Provide your true full name

• Pay the application fee

• Pass a vision exam

• Pass a traffic laws and sign test. There are 36 questions on the test. You have three chances to pass.

Source: CarInsurance.com

No, it does not appear possible for you to obtain a Colorado driver’s license while your Illinois license is suspended.

The Colorado’s Driver Handbook lists reasons why persons who cannot be issued a CO driver’s license. Here it includes:

• Any person under suspension, revocation, or denial of driving privileges in this or any other state.

• Any person who has unpaid fines or outstanding judgments for traffic violations.

Colorado, and all other states, check the National Drivers Registry (NDR) when a person applies for a driver’s license. The NDR is a central database of information on problems drivers, meaning motorists whose license is revoked, suspended, canceled or denied or has been convicted of a serious traffic related offense.

All 51 US jurisdictions provide information to the NDR and can search the database for information on drivers applying for a driver’s license. So if you are moving and want to obtain a license you will first need to get your driving privileges reinstated in Illinois.

Source: CarInsurance.com