Auto Insurance Rate Increases Spur Insurance Lapses
The increase in auto insurance rates in 2008, after a couple years of flat or declining premiums, in combination with the overall poor economy has lead to a steep increase nationally in the number of people who let their car insurance policies lapse. Several hundred thousand drivers across the country allowed their policies to lapse in 2008 according to the insurance research council. Similarly, insurance.com, found that about 40% of people calling into their call center in regards to applications they submitted online indicated that they had let their policies lapse. The compares to less than 10% in recent years. Studies have shown that for every 1% increase in unemployment, uninsured drivers increase by 0.5%
Letting your auto insurance policy lapse is never a good idea even if you are lucky enough to not get in an accident over the period of time when you are uninsured. Uninsured motorists who let their policies lapse can be charged as much as 25-50% additional surcharge for a new policy, because they believe that allowing your policy to lapse indicates that you are less responsible and a greater risk than responsible drivers.
Tags: Uninsured Driver
