Smart Auto Insurance Blog

According to the article “Car Insurance Scofflaws Raise Health Mandate Doubt” by Kristen Wyatt from the Associated Press found on Google, thousands of people on the road do not carry auto insurance even though most states require it.  This raises the question of the effectiveness of a health insurance mandate working.  It is something Congress continues to consider.

There have been auto insurance mandates out there for about 40 years and the insurance industry says it has not necessarily made the roads safer nor has it lowered auto insurance rates.  The President and CEO of the Property Casualty Insurers Association of America believes that a driver’s personal financial situation is a better indicator of whether or not they will carry auto insurance.  High auto insurance rates may force a driver who is strapped for cash to go uninsured. 

States with higher poverty levels have a similar correlation with the amount of uninsured drivers are on the road.  People cut back on auto insurance when they can’t afford it and there is a real possibility that if they make health insurance a requirement the same thing will happen.  People cut costs where they can in times of trouble and although health insurance and auto insurance are both highly important coverages, people risk going without it to put food on the table and keep water in their home.

Short term auto insurance can be purchased for 1 day to 6 months for uninsured or underinsured motorists.  This is according to an article found on onlineprnews.com from InsuranceAgents.com. 

Since car accidents can occur at any time, but any type of driver it’s important to ensure that everyone on the road have insurance, even if it’s drivers who aren’t on the road regularly. 

One-day auto insurance can be beneficial for different scenerios.  Vacationers can purchase it when traveling, test driving a car, or borrowing  friend’s car.  Just because you are driving a short distance or a short time frame don’t think you are aren’t at risk of being in a financially disasterous accident.  Short term auto insurance quotes can fully protect you, so it’s worth looking into if this would fit your needs.

A new study estimates that one in five drivers go without Tennessee auto insurance, and that the rate of uninsured motorists is set to rise. The Chatanooga Times Free Press’  Brian Lazemby writes that increasing joblessness in the state is to blame for the expected increase, as unemployed people have to choose between paying their auto insurance premiums and covering the cost of essentials like food and housing. Even more uninsured drivers could be on the road, if you count drivers from other states passing through Tennessee. 

While times are tough, the jump in uninsured drivers makes it even more important that you have auto insurance with uninsured motorist coverage. You can get auto insurance quotes to find an inexpensive policy you can afford, so you don’t drive without insurance.

Carla Castano from KXAN Austin recently reported on a new trend: police are pulling over drivers, and towing their cars if they lack Texas auto insurance. The ordinance came into effect last week in Dallas. Reportedly, Austin is planning to consider a similar ordinance. Texas’ Auto Insurance Verification Program, run by the state’s Department of Public Safety, is able to run a person’s license plate in order to tell if they have liability insurance.

These new laws may result in more defensive driving by the uninsured to avoid being pulled over in the first place, predicts Carla. Even though it already costs about $250 to pay a ticket for driving without insurance in Austin, almost a quarter of the population was still driving uninsured.

Insured drivers may need to have uninsured motorist coverage to protect themselves. The economy is making more drivers forgo car insurance in favor of other essential needs. Unfortunately, uninsured drivers often lead to higher auto insurance premiums for everyone; often, they also have to pay penalties once they reinstate their insurance. 

(Photo credit: qthrul under CC 2.0)

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.

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.