Virtually every state in the United States requires you to purchase a liability insurance policy before you may legally drive on any city, county, state or federally-owned roadway. The penalties for driving without insurance vary greatly from state to state but in most cases are severe and will result in fines, penalties or even time in jail.

Rather than risk the impoundment of your vehicle or worse, it is better to purchase at least the minimum insurance that is required by the state in which you live.

Most states have cheap, high risk car insurance. This insurance is known simply as basic liability insurance. The minimum amount of liability insurance that drivers are required to pay for varies by state. However, an auto liability policy is generally referred to as something along the lines of 10/20/10. [These numbers are merely being used for illustrative purposes; consult with an insurance agent or your state's department of motor vehicles for the amount required in your particular state].

The first number (a 10 in this example) refers to the maximum medical payment that will be made to any one individual who is involved in an accident with your vehicle. In this example the "10" stands for $10,000. $10,000 is the maximum this policy will pay to any one individual regardless of how serious or expensive their injuries are.

The "20" in our example is the maximum payment that the insurance will make to cover the medical expenses of everyone involved in the accident, regardless of how many people that might involve or the extent of their injuries.

The final "10" in our example refers to the maximum amount that this liability policy will pay for property damage. While this can pay for a variety of damages that your vehicle causes, primarily the property damages portion of your liability insurance is used to pay for the repair or replacement of the other person's vehicle.

As you can imagine, this type of cheap, high risk car insurance comes with the potential for problems, especially if you own a home or have other assets that could be threatened by a lawsuit if the limited liability insurance that you are required to purchase does not pay the full amount of medical or property damages resulting from an accident.

Even if you do not have assets that need protecting, if your cheap high risk insurance fails to cover all of the medical expenses or property damage that your vehicle causes as the result of an accident, it is possible that you will be held personally responsible for paying any excesses costs that are not covered by your insurance.

This is why many people choose to purchase liability insurance with higher limits than those mandated by the state as the minimum necessary to legally drive a vehicle on public roadways. Of course, if you purchase a policy with higher limits than those required by the state then you will pay a higher premium.

So in a sense the purchase of cheap high risk car insurance is a form of gambling. If the dice continue rolling in your favor and you are accident free or are only involved in minor fender-benders, then purchasing high risk insurance could save you a considerable amount of money over the years.

But keep in mind that all it takes is one major accident and your gamble could turn into a nightmare in the blink of an eye.