October 29, 2009

Uninsured Motorists To Continue To Increase Through 2010

There has been an upsurge lately in the number of motorists driving without insurance, and this increase is expected to continue through 2010. A study conducted by the Insurance Research Council estimates that one in six drivers has either let their auto insurance coverage lapse or was never insured in the first place. The likely explanation for this increase is the poor state of the overall economy and the high unemployment rate in the country. When people are struggling to pay their bills, auto insurance premiums seem like an expense that can be avoided. Unlike failing to pay an electric bill, which will result in the loss of a vital service, struggling motorists assume that not paying for auto insurance will have no immediate consequences. For some, this is indeed the case. But for others, the disposing of auto insurance coverage can be considerably more costly than simply paying their bills.

There are severe legal penalties for driving without insurance. If you are pulled over by a police officer, he will automatically ask to see proof of insurance. If you do not have coverage, he will issue you a ticket. Fines vary from state to state, but they can run as high as $500. In addition, many jurisdictions will impound your vehicle if you are caught driving without a license, especially if you are deemed likely to continue driving without coverage.

If you are involved in an accident while driving uninsured, you will be considered personally liable for any damage that you cause. Your home or any other assets you possess will be at risk if you do not have enough cash to pay for damage to property or other people, both of which can be extremely expensive. If you are married, your spouse's property will be at risk as well. On top of this, you will bear the psychic burden of having impacted the lives of others without being able to take responsibility for the consequences of your actions.

The cost of auto insurance premiums for drivers who do purchase coverage also rises with the growing number of uninsured motorists on the road. The typical policy now includes coverage for damages caused by an uninsured motorist. This feature is part of the typical auto insurance package simply because there are so many drivers on the road without insurance. It makes sense to be protected in the event of a collision with one of them. But when insurance companies find themselves with so many claims that the financial viability of their operations grows threatened, they begin to raise their rates.

Driving without insurance may seem like a short-term fix to your personal cash flow concerns, but it is sure to have long-term consequences.