How to Sell a Car Without Insurance

It is possible to sell a car without insurance by simply handing in your license plates, but you must maintain insurance coverage on a car while it is still registered in your name.

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Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Written by Rachel Bodine
Feature Writer Rachel Bodine

Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. He reviews content, ensuring that ex...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent Daniel Walker

UPDATED: Jun 13, 2022

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Things to remember

  • Selling a car without insurance is possible so long as you turn in your license plates and stop driving it
  • If auto insurance is mandatory in your state, you must always keep valid insurance on your car for the time it stays registered in your name
  • Remember you are responsible for any accidents caused if someone else drives your car, even during a test drive

You may not initially think about insurance when selling a car, but it’s actually something that needs consideration. So what do you do if you have no insurance, but want to sell your car? It is possible to sell your car without insurance, but it is better to keep valid insurance on your car throughout the selling process and transfer your car registration to the new buyer at the correct time.

We know how tedious and time-consuming it can be to sell a car, so in this article, we will show you the easy and correct way to sell a car without insurance.

How to Sell a Car Without Insurance 

To sell your car without insurance, you simply need to cancel your insurance policy and return your registration plates to your state’s department of motor vehicles. You should also make sure your ad explains that the car is uninsured and cannot be test-driven. When you sell your car, hand the new buyer the title and a bill of sale, and they can then go to register the vehicle. 

When you buy from a car dealership, you can test drive a car without insurance because the dealership holds insurance on their vehicles. A private buyer can’t test drive your car unless you have insurance.

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Risks of Selling Your Car Without Insurance 

Although selling your car without insurance can seem like an easy way to save a few dollars, there are some drawbacks to selling a car without insurance.

Risks you need to consider include:

  • Potential buyers will not be able to test drive your car if it is not currently insured
  • Having your registration suspended delays the buyer from transferring the vehicle into their name, and they might encounter extra fees — this could deter the buyer from completing the sale
  • If your uninsured car is parked in a public place, it may be impounded, and the required insurance (and fees) will need to be paid before it’s released
  • If you drive your vehicle to a service or a meeting place for a potential buyer to view, you could receive citations for driving uninsured or even have your license suspended
  • If that happens, you may also face high-risk insurance rates in the future

Letting your insurance lapse or canceling it before you try to sell the car could make it harder for you to sell your car, and even lead to financial and legal problems down the line.

Is auto insurance mandatory in the U.S.?

It’s compulsory to comply with auto insurance laws in almost every state, so that means you always need to have insurance if you live in one of these states.

Even if you are selling your car, you are still required to carry auto insurance on your car if it’s registered in one of these states with mandatory laws.  If you want to remove the insurance from your car, you will have to turn in your license plates.

Remember, if you are the registered owner, it is your legal responsibility to ensure the vehicle is insured, even if it is being driven by someone else.

So if you do plan to sell your car, keep in mind that it is the registered owner’s responsibility to hold an insurance policy, and not the obligation of the driver or the potential buyer.

Can I sell my car with no insurance on the private market?

You can probably get the best price when you sell your car to a buyer on the private market, you just need to make sure you’re doing things according to the state laws.

When you’re selling your car to a private party, make sure you do the following:

  • Protect yourself as a seller by being honest and upfront about your car’s particulars
  • Screen potential buyers when they contact you
  • Turn in your license plates if you do want to sell the car without insurance

Remember, it is legally possible to sell your car with no insurance on it, but you must turn in your license plates first.

If you are a private seller selling your car to an uninsured private buyer, be mindful that if the vehicle is uninsured, the potential buyer can only tow it away.  They cannot drive the vehicle away or register it in their name without valid insurance on it. 

You also can’t let potential buyers test drive an uninsured car, so it’s best for both the buyer and the seller to have valid auto insurance. 

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Is selling a car with no insurance a good idea?

Selling your car without insurance is possible, so long as you make sure you have turned in your license plates. This means that it is no longer necessary for you to have valid insurance on the vehicle. However, this means a buyer can’t test-drive the vehicle and you cannot drive it at all – including to meet them at a safe location.

After the sale has been made, the potential buyer can then transfer the registration of the vehicle into their name.

And remember, until this has been done, you must maintain auto insurance while you are still the registered owner and you are still driving the car.

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