In the majority of cases, the answer is yes.

Driving without insurance is illegal in all but two states: Virginia and parts of Alaska.

If you don't have insurance, you'll be on the hook for medical bills, repairs, and other expenses if you get into an accident. That's why getting car insurance is often easier (and more cost-effective). However, the amount of insurance you require is largely determined by where you live and your risk tolerance.

What’s the least amount of car insurance I need?

Every state has its own requirements for the type of car insurance residents must have and the amount they must carry.

Almost every state requires drivers to have liability insurance. Liability car insurance covers the medical expenses, lost wages, and property damage caused by you in a traffic accident. It will not cover your own medical or car repair expenses.

You may also have to pay for the following, depending on where you live:

• Uninsured/underinsured motorist coverage: Pays for your medical bills and car repairs if you are hit by a driver who has little or no insurance.
• Personal injury protection coverage, or PIP: Also known as "no-fault insurance," PIP pays for medical expenses, lost wages, funeral costs, and other expenses for you and your passengers, regardless of who is at fault.
• Medical payments coverage, or MedPay: This also reimburses you and your passengers for medical expenses regardless of fault.

Are you unsure about your state's requirements? For a complete breakdown, see InsuredCircle minimum car insurance requirements by state. Most insurance quotes obtained online or by phone will automatically include any state-mandated minimums.

Should I get more than just the bare minimum?

Paying for car insurance may feel like a waste of money. This is particularly true if you have never been in an accident.

However, disaster can strike at any time. According to the most recent data from the National Highway Traffic Safety Administration, while cars are becoming safer to drive, fatalities from car-related accidents are on the rise. A single car accident can result in a significant financial setback if you are uninsured or underinsured.

Most states' minimum requirements are insufficient to cover all expenses from major car accidents, leaving you to pay the remaining balance if you're at fault.

Let's say you live in New Jersey and have the bare minimum of property damage liability insurance, $5,000. If you cause an accident with another driver and it costs $15,000 to repair their vehicle, you must pay the remaining $10,000 yourself. Not to mention the repairs to your own vehicle.

Take note: If you leased or financed your vehicle, your lender will almost certainly require you to have collision and comprehensive insurance in addition to any state-mandated minimums. These coverage types pay for repairs or replacement of your own vehicle in the event of an unforeseen event.

Cover your net worth

Because you are legally liable for any accidents you cause while driving, you should obtain enough liability insurance to cover your net worth if you are sued.

Your net worth can be calculated by subtracting your total debt (mortgage, credit card balances, and loans) from the total value of your assets (house, cars, cash in the bank and investment accounts).

If your net worth is low, meeting your state's minimum car insurance requirements may suffice. However, most states do not require you to purchase car insurance that reimburses you for your own medical or car expenses if you are found to be at fault in an accident or experience another mishap beyond your control.

What happens if I drive without insurance?

The penalties for driving an uninsured vehicle differ depending on the state and the number of prior offenses.

If you're caught driving without insurance, you could face the following penalties:

• Fines as high as $5,000.
• Impoundment.
• Jail time.
• Suspended driver's license.
• Suspended car registration.
• Insurance rate hikes.

Where is it legal to drive without insurance?

You can drive without insurance if you live in one of the following states and meet the requirements:

• Virginia: pay a yearly $500 fee to the Virginia Department of Motor Vehicles.
• Alaska: reside in a remote area designated by the Alaska Department of Administration.

If you do not live in Virginia or the Alaskan wilderness, you may be able to drive without insurance if you can demonstrate "financial responsibility" to your state by submitting a bond, certificate of deposit, or other cash deposit. The dollar amount required varies; Florida requires a $30,000 bond or cash deposit, while Nebraska accepts a $75,000 bond or certificate of deposit. In New Hampshire, a large sum of money is also required as proof of financial responsibility, but only if you are found to be at fault in an accident.

Take note: In these cases, you’ll have to own your vehicle outright, since nearly every lender requires full coverage insurance.

Buying car insurance is the most common and simple way to demonstrate financial responsibility to your state. That's because it's often cheaper (and easier) to pay a monthly insurance premium rather than pay a large lump sum of money or risk your entire savings.