Smart Auto Insurance Blog

RateWatch recently released its fourth quarter 2008 report, which highlights the poor consumers in states with the greatest increase auto insurance rates. Believe it or not, during this recession premiums actually increased by 8% over the past year!

Highest auto insurance premium increases:

1. Washington, D.C. auto insurance rates increased by 10.5% in Q4.
2. Utah auto insurance rates followed close behind with a 10.2% increase.
3. Colorado auto insurance rates saw a less severe, but still significant 6.1% increase.
4. Delaware auto insurance rates went up by 5.6% in Vice President Joe Biden’s home state.
5. Wyoming auto insurance rates increased by 5.5% in the fourth quarter.

Russ Wiles from the Arizona Republic has a great tip to save money on your auto insurance. He suggests that you re-evaluate just how much you drive every year. Don’t overpay for your car insurance! I’m sure you have far better things to spend your money on, especially at this time of year.

Insurers charge different rates based on your yearly mileage. If you’re driving less for any reason (lost your job, shorter commute, etc.), check to see if you can be considered a “pleasure driver”. Your premiums will drop 10-15% in that case. The majority of providers consider pleasure drivers those that drive under 7,500 miles per year, but if you compare auto insurance you might get lucky and find one that’s more lenient.

(Photo credit: Glen Bowman under CC 2.0)

Today, I read a new article in the Wall Street Journal about the increase in uninsured motorists over the past few months. M.P McQueen reports that a recent survey by the Insurance Research Council found that several hundred thousand Americans have dropped their auto insurance over the past year, and that a 1% increase in the unemployment rate results in a 0.5% increase in the number of uninsured drivers.

Experts blame this issue on a perfect storm of higher unemployment and higher premiums hitting consumers at once. The U.S. Labor Department’s consumer price index indicates that auto insurance premiums have increased 3.8% over the past year. While I can’t blame drivers for trying to save money on auto insurance, dropping your insurance isn’t a good way to do it. Not only is driving with insurance illegal in 48 states and Washington, D.C.; but in the event of an accident, all of your assets could be wiped out in court. Also, you can be penalized with a 25-50% increase in premiums when you decide to buy auto insurance again.

A lot of people who have kept their auto insurance have downgraded to the bare minimum coverage, which may not be enough. If you get in an accident with an uninsured driver, uninsured motorist insurance will protect you and compensate your medical expenses. 20 states currently require this type of insurance by law; drivers in other states who don’t have this coverage would have to sue for compensation. Most uninsured drivers don’t have a lot of assets, so you’d be very unlikely to recoup any catastrophic medical expenses. Although uninsured and underinsured motorist coverage adds from 7% to 9% to your insurance premium, the increase in uninsured drivers on the road could make it valuable for drivers in every state.

Find out if your state auto insurance requirements include uninsured motorist coverage.