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Do I need car insurance? What if I can't afford it? Don't let your coverage lapse. It's illegal to drive without insurance

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Even though it can be expensive, you need car insurance. Unless you live in New Hampshire, state law requires that you purchase liability insurance for your vehicle or show some other form of financial responsibility.

Even if you are among the 0.5% of Americans that do reside in New Hampshire, you should probably have at least some liability coverage to cover yourself in the event of an accident.

Car accidents are expensive. If you're on the hook for medical expenses, legal fees, and property damage, the grand total can be astronomical. The National Safety Council found that the impact of injuries "amounted to $625.5 billion in 2005" alone.

If You Can't Afford Your Car Insurance Payments

To put it bluntly, if you can't afford car insurance, you can't afford to drive. But perhaps there's a way to mitigate the issue. If you have a lien on your car (meaning it's leased or financed), you should consider downgrading to something you can buy outright. This will save you the added cost of carrying both collision and liability coverage.

While it is not recommended, you can save dramatically on your auto insurance policy if you purchase insurance at your state's minimum levels of liability coverage. As car values have increased along with medical costs, it's inherently risky to purchase only your state minimums, but drastically cheaper. You will probably have to talk to several agents before you find one that will even write you the policy. Agents are patently aware that state insurance minimums are much like minimum wage—often not enough.

If you've fallen on hard times—and you're not alone—don't treat your auto insurance as an optional expenditure unless you can give up driving altogether. For most Americans, this isn't a realistic option. If you have to, temporarily trim down the policy you have to the bare essentials, but don't forget to increase them as soon as you can afford it. Really, you can't afford not to.

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