One of the more concerning patterns observed throughout the recent economic slump has been a substantial proportion of Americans canceling their car insurance policies. More and more people are attempting to save money by decreasing their costs, but they may be unaware that eliminating their auto insurance may cost them more money in the long run. This has caused a rise in uninsured motorists.
Driving without insurance is against the law in practically every state. If you are engaged in an injury accident and are not insured, the other motorist may sue you for a large sum of money. Allowing your auto insurance to lapse for even a short period will result in prices that are nearly twice as high when you repurchase an insurance policy.
It is preferable to cut your coverage as much as you can afford rather than risk the repercussions of driving without insurance.
The lower annual insurance bills are significantly less expensive than the possible cost of covering an accident without any insurance.
Downward trend of the economy = uninsured drivers
The number of uninsured motorists in the United States increased substantially as the economy deteriorated. Uninsured motorists have increased in number as unemployment rates have risen over the last five years. Currently, drivers in most of the United States stand a 10% probability of colliding with someone who is driving without insurance. According to the most current data, the states hardest hit by the recession had the highest number of uninsured motorists.
According to the survey, the states with the highest number of uninsured drivers are in the South and Midwest. One reason for these high rates could be that these areas lack the public transit systems found in the Eastern states. The Northeast has the best record for uninsured drivers, with states like Maine and Massachusetts reporting as few as 4% of their uninsured drivers.
Uninsured motorist rates in densely populated states, such as California and New York, were believed to be about 15%.
Higher costs for a legal battle
If you lose your job or have your income abruptly decreased, it may seem like a wise idea to cancel your car insurance for a few months.
There’s a chance you won’t be in a car accident if you’re uninsured. Therefore you’d be saving money with no penalties. The problem is that reducing your insurance today will make it more difficult to find a policy in the future. Some insurance firms refuse to accept consumers who have had a lapse in coverage.
If you have the misfortune of getting involved in a car accident while uninsured, things might get very pricey. The first issue will be attempting to fix or replace your car without having insurance.
The second issue would be your need to compensate the other driver for damages and injuries if the collision was your fault. If your state requires a certain amount of insurance, you will also face legal consequences if you drive uninsured. Being uninsured does not absolve you of the need to compensate the other driver.
The driver will likely sue you, which could result in wage garnishment or other unfavorable consequences.
State penalties for driving uninsured
States that require all drivers to obtain car insurance have begun to crack down on uninsured motorists. Texas and Wyoming are increasing the penalties for driving without proof of insurance. Texas has enacted a provision that harshly penalizes drivers who commit a second violation. Fines can reach $1,000, and the state may suspend your driver’s license. Repeat offenders may face a $250 annual fine allowing them to keep their driver’s licenses for the next three years after being detected driving without insurance.
Even the most cautious drivers who avoid accidents might be discovered driving without insurance. Many states have started to set up checkpoints on major highways where officers will ask each driver for evidence of insurance. You can also be stopped for driving without insurance if you live in a state where proof of insurance is required to renew your license plates.
An expired tag is a straightforward approach for police officers to identify drivers who may be uninsured. Driving with an expired registration brings its own set of heavy consequences.
Insured drivers facing the brunt of uninsured drivers
When the number of uninsured drivers increases, so do the available insurance prices for everyone who still has coverage. Insurance firms must boost their rates to account for the increased risk of paying out uninsured motorist benefits if their clients are involved in an accident with someone who is not covered.
Someone who carries the appropriate quantity of insurance will face increased rates since their insurance company will have to pay a more considerable compensation if the individual found at fault in an accident does not have their insurance policy.
When uninsured drivers allow their insurance coverage to lapse, they cause different problems for themselves and other drivers. Each year, hundreds of thousands of dollars are paid out in settlements involving uninsured motorists, and that sum will continue to rise as the number of uninsured drivers increases.
The only time anyone should cancel their car insurance is when they intend to sell the car. If you need to reduce the cost of your insurance coverage, speak with your insurance agent and compare prices online. It is less expensive to keep your coverage than it is to drop it entirely.