Under U.S. law, every person who drives a car must be covered by automotive liability insurance. This way, if the person gets in an accident, he will be afforded some financial protection. Although the purchase of this insurance is mandated by the government, policies must be purchased from private insurance companies. These companies are free to accept and reject customers as they see fit. Some individuals without bank accounts may have difficulty getting insurance.
Car Insurance Requirements
In order to receive car insurance, an individual must be able to afford the payment of premiums assessed by the insurance company for providing coverage. When determining the price of these premiums, car insurance companies examines the financial status, driving record and credit history of each applicant. Generally, a person is be charged extra for failing to have a bank account, but it may complicate the payment of the insurance policy.
Car insurance policies are usually issued for relatively short periods of time, generally six months to a year. The policyholder has the option of paying for this coverage in one lump sum in advance or paying one month at a time. If the person is paying month to month, he will have to make a payment to the insurance company every month. Some companies may refuse to accept cash or money orders.
Whether a person without a bank account can buy a policy from an insurance company will depend on what payment methods the company is willing to accept. While some companies accept payments not linked to a bank account, such as cash or money order, so long as the payment is on time, others demand that the money be drawn from a checking account and be provided either through a check or through a monthly direct withdrawal.
Few companies are likely to turn away a client if he demands to pay in cash. However, if the client cannot offer an active bank account and wishes to pay month-to-month, the company may demand some alternate form of security on the account. This is to prevent the individual from purchasing a year of coverage and then paying for only a few months, in violation of company policies.
Michael Wolfe has been writing and editing since 2005, with a background including both business and creative writing. He has worked as a reporter for a community newspaper in New York City and a federal policy newsletter in Washington, D.C. Wolfe holds a B.A. in art history and is a resident of Brooklyn, N.Y.