Smart Auto Insurance Blog

The continuous stream of auto insurance commercials on TV bragging about their lower rates may have consumers believing rates are down.  Unfortunately, this is not the case.  Auto insurance rates have increased about 10% between 2008 and 2010 based on smartmoney.com’s report from the Insurance Information Institute.  It doesn’t stop here.  Rates are expected to rise further this year by around 4%.  In the last 10 years, rates have risen by 30% causing financial strain on millions of Americans.

The executive director of advocacy group Consumer Watchdog, Douglas Heller, points out that this is a very different picture than what is painted in the media.  Many consumers don’t even realize they are paying so much more for their auto insurance coverage.  Larry Thursby, vice president of personal auto insurance for Nationwide Mutual Insurance says it’s cost-based pricing and as costs increase for the insurers, price hikes are passed on to the consumer.

The article “Auto Insurance Rates On the Rise” by Jason Collazo on Forbes.com talks about how increasing medical costs are making auto insurance rates higher.  Exorbitant medical bills auto insurance companies have to cover for injuries due to auto accidents are making rates increase.  This is in addition to more expensive parts and more expensive labor.  These high rates are pushing more drivers to go without auto insurance even though that is against the law.  About 16% of drivers are currently unemployed, and this number could increase as rates go up further and the economy continues to struggle.

Written by Sara Smart

Follow me on Twitter: SaraSmart55

Based on a recent online survey completed by the InsuranceQuotes website, a surprising 16% of American drivers say that they have driven without carrying auto insurance, which happens to be against the law.  Also in this survey, 2% admitted to currently driving around without auto insurance which is concerning for all insured drivers on the road.

With the past few years being tough economic times for many, this probably makes sense.  According to the article “16% of Motorists Have Driven Without Insurance” by Alex Vorro on insurancenetworking.com, 28% of males ages 18-25 and 45-54 were at the top of the list for driving without insurance.  The percent of women driving without insurance is only about half of men.

Men and women combined in the age group 45-54 were the most likely to have driven without insurance at about 22%.  In the age group over 55 only 8% have admitted to ever driving with auto insurance.  The survey also looked at the reasons why people were driving with out auto insurance.  Auto insurance quotes can be expensive and it would seem that would be one of the reasons.  Actually, 24% of drivers drove without auto insurance because they didn’t have a chance to renew, 19% because of a gap while switching insurance companies and 12% because the insurer cancelled their policy.

According to the article “State Insurance Official Says 15 Percent of Montana Drivers are Uninsured” by Charles S. Johnson on www.missoulian.com, Montana’s uninsured rate is slightly higher than the national average.

The national average for uninsured drivers is 13.8% while Montana is coming it at 15%.  Even neighboring states are much lower.  Mari Kindberg, the property and casualty actuary in the state Auditor’s Office says North Dakota comes in at 5%, South Dakota is at 7% and Wyoming is at 9%.  What is different about Montana that’s making Montana auto insurance quotes unattainable?

Kindberg states that Montana already has laws requiring drivers to have auto insurance and there are stiff penalties for those who choose not to and get caught.  The Revenue and Transportation Interim Committee is studying the problem of uninsured and underinsured drivers.  The Auditor’s Office recommended changing the state credit act to assist consumers keep their current auto insurance policies and make rates affordable during tough times.  This may help Montana’s high uninsured rate.

It is against the law to drive without auto insurance in Arizona and most of the country.  You also must carry proof of insurance.  According to the article “Proof of auto insurance requirements changing in Arizona” by Delane Cleveland on fox11az.com, the law is getting stricter when it comes to carrying proof of Arizona auto insurance. 

Tony Riojas, the presiding magistrate for Tucson City Court says no proof of insurance is one of the most common citations that come through court.  Currently, if someone has to go to court to prove insurance, charges are often dropped or reduced but starting October 1 that will change.  Before you can get any reduction in fine not only must you show proof of insurance but you will also need to prove that you have not gotten an insurance violation within the past two years, or only one citation in the past three years. 

Repeat offenders can face fines up to $1,000.  Governor Jan Brewer signed the bill back in July to approve these provisions and insurance companies across Arizona approved.  They believe this bill will reduce the number of uninsured drivers on the road.

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.

Carrying auto insurance is the law in most states, but according to the article “How To Cut Your Auto Insurance Bill” on bignews.biz drivers in record numbers are dropping their auto insurance policy because of unemployment and other financial issues.  The recession has taken a toll on us all.  But dropping your auto insurance can cause big problems and is not worth the risk.

Just one auto accident can ruin you financially if you are not insured, not to mention get you in big trouble with law enforcement.  If you are struggling to pay your bill, you are much better off in the long run to look for ways to decrease your auto insurance rate instead of dropping your policy altogether. 

One way to decrease your auto insurance rate is by raising your deductible to a higher level.  Another important step is to compare auto insurance quotes.  You can do so online, over the phone, or by visiting a nearby auto insurance agent.  Doing so can save you hundreds and the process is relatively painless.  Protect your assets and stay honest by keeping auto insurance policies in good standing if you are driving on the road.

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.

Brooke Thatcher from KUSA reports that the number of drivers without Colorado auto insurance is growing, from an already shocking 15% in 2007. The economy is causing people to cut back on car insurance, but doing so could be more dangerous to their finances in the long run. If you get into an accident while driving uninsured, your income and assets could be garnished!

Thatcher suggests safer ways to save money on auto insurance:

• Raise the deductibles for comprehensive and collision coverage, and or/lower their coverage limits. (However, don’t skimp on uninsured motorist or liability coverage.)
• Talk to your insurance provider; they may be willing to help you modify your plan.
• Get auto insurance quote comparisons from several companies, and see if you can get a better deal on your rates.

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)

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.