The uninsured motorist fee is a flat annual payment that lets you legally register a vehicle without buying liability insurance, and it provides no coverage at all if you’re in an accident. South Carolina charges $550 a year for it. Virginia, the only other state that offered a comparable option, repealed its $500 fee on July 1, 2024. Every dollar of damage you cause, every medical bill, and every legal defense cost falls on you personally.
What the Fee Actually Buys
The fee is a state-created alternative to proving insurance at registration. Instead of submitting proof of liability coverage, you pay the fee and acknowledge in writing that you have no insurance. South Carolina’s registration application says so in bold print: the fee “is not an insurance premium and you are not purchasing any insurance by paying this fee.”1South Carolina Legislature. South Carolina Code Section 56-10-510 – Registration of Uninsured Motor Vehicle
That distinction is the whole point. The fee buys you one thing: the legal right to register your vehicle and put plates on it. It does not create an insurance policy, pay for injuries or property damage, or protect you from lawsuits. You are paying for paperwork.
Which States Still Offer It
As of 2026, South Carolina is the only state that offers a straightforward uninsured motorist fee as a substitute for liability insurance at vehicle registration.
Virginia was the other well-known state to offer one, at $500 per year. Senate Bill 951 repealed it effective July 1, 2024.2Virginia General Assembly LIS. SB951 – 2023 Regular Session Drivers already registered under the fee saw those registrations expire before that date and needed liability insurance to re-register. A few other states, like New Hampshire, don’t mandate liability insurance at all, but they handle it through different mechanisms rather than a specific registration fee.
What the Fee Does Not Cover
Nothing. More specifically:
- Property damage you cause to other vehicles, buildings, guardrails, or anything else.
- Medical bills for anyone hurt in an accident you cause, including emergency care, surgery, and rehabilitation.
- Your own medical expenses, even if someone else hits you.
- Damage to your own vehicle. No collision or comprehensive coverage exists under the fee.
- Legal defense. If you’re sued after an accident, you pay for your own attorney and court costs.
- Lost wages or future earning capacity claimed by injured parties.
With a liability policy, your insurer handles claims, negotiates settlements, and provides a lawyer if you’re sued. With the fee, none of that exists. The injured party or their insurance company comes directly to you.
Where Your Money Goes
The fee doesn’t benefit the driver who pays it. Revenue flows into an Uninsured Motorist Fund held by the state treasury, then is distributed annually to insurance companies that write auto liability policies in the state. In South Carolina, each insurer receives a share proportional to how much of the state’s total auto liability premium it wrote the previous year.3South Carolina Legislature. South Carolina Code of Laws – Title 38 Chapter 77 Section 38-77-155 In Virginia, before the repeal, $100 of each fee went to the DMV for administrative expenses and the rest to the fund.4Virginia Code Commission. Virginia Code 46.2-710 – Disposition of Funds Collected
The structure exists to offset the costs that insured drivers absorb when they’re hit by someone without coverage. You get nothing back from the fund.
What Happens If You Cause an Accident
Causing an accident while paying the fee instead of carrying insurance triggers a chain of consequences that can follow you for years.
Civil Judgments and Wage Garnishment
When an insured driver’s insurer pays a claim because you hit their policyholder, that company will pursue a subrogation claim against you to recover what it paid. If a court enters a judgment you can’t pay in full, your wages can be garnished. Federal law caps the garnishment at the lesser of 25% of your disposable earnings or the amount by which your weekly pay exceeds 30 times the federal minimum wage.5Office of the Law Revision Counsel. 15 U.S. Code 1673 – Restriction on Garnishment Garnishment continues until the judgment is satisfied, and unpaid judgments accrue interest at rates that vary by state.
A single accident with serious injuries can produce a judgment well into six figures. With no policy limits to cap your exposure, the full amount lands on you. The judgment creditor can also pursue bank levies and property liens.
License and Registration Suspension
An unpaid accident judgment in most states triggers suspension of your driver’s license and vehicle registration. Getting them back requires paying the judgment in full or reaching an installment agreement with the creditor. Most states also require you to file an SR-22 certificate of financial responsibility, verifying that you now carry at least minimum liability coverage. You’ll typically need to maintain the SR-22 for two to three years, and insurers charge significantly higher premiums for drivers who need one.
In Virginia, even before the fee was repealed, drivers caught without insurance faced a $600 noncompliance penalty on top of needing to file an SR-22 for three years.6Virginia Code Commission. Virginia Code 46.2-706 – Proof of Insurance Required of Applicants for Registration of Motor Vehicles Drivers who paid the $500 fee to avoid buying insurance often ended up spending far more than a year’s premiums after a single incident.
Financed or Leased Vehicles
If you’re making payments on your vehicle, paying the fee instead of buying insurance will almost certainly violate your loan or lease agreement. Lenders require both liability coverage and physical damage coverage as a condition of financing.7Consumer Financial Protection Bureau. What Is Force-Placed Insurance?
If your insurance lapses, the lender can buy force-placed insurance on your behalf and add the cost to your loan balance. Force-placed coverage costs significantly more than a policy you’d buy yourself, and it protects only the lender’s financial interest in the vehicle, not you. You’re still personally exposed for all liability and your own injuries, and now you’re paying inflated premiums on top of it. The fee satisfies no lender insurance requirement.
The Fee vs. Uninsured Motorist Coverage
These two things have similar names and work in opposite directions. The uninsured motorist fee is what you pay to drive without insurance. Uninsured motorist coverage (often called UM or UIM coverage) is an actual insurance product that protects you when you’re hit by a driver who has no insurance or not enough insurance.
UM coverage pays for your medical bills, lost wages, and sometimes property damage when the at-fault driver can’t cover what they owe. Many states require insurers to include it in every auto policy. Paying the fee means you don’t carry UM coverage either, so if an uninsured driver hits you, you’re on your own for your own injuries and vehicle damage.
Whether the Fee Saves Money
South Carolina’s $550 annual fee looks cheaper than the roughly $750 national average for a minimum liability policy. The comparison ignores the exposure the fee leaves behind.
Minimum liability insurance does more than satisfy registration requirements. It pays for damage you cause to others up to your policy limits, provides a legal defense if you’re sued, and gives you a framework for handling claims without personal financial ruin. The $200 or so you save by choosing the fee evaporates the moment you’re involved in any accident. Even a minor fender-bender where you’re at fault means paying the other driver’s repair costs out of pocket, and those costs start in the thousands.
For drivers who struggle with standard premiums, most states offer low-cost auto insurance programs or payment plans through private insurers. Those options provide at least baseline protection. The fee provides none, and the math only works in your favor if you never have an accident.