More Drivers Are Uninsured As Recession Grows Deeper

Michael Levine

Contributor

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Chances are increasing that the next fender bender you are involved
in could be with someone without car insurance. As the recession
leaves millions of workers unemployed and pressures family budgets,
one place many are cutting is their insurance coverage.

The Insurance Research Council (IRC) estimates that by next year
nearly one in six motorists may be driving without insurance. That’s 3
million more uninsured drivers than just five years ago.

For every 1 percent increase in unemployment nationwide, the
percentage of uninsured motorists increases three-quarters of a
percentage point, IRC Vice President David Corum said. That could
result in a total of 16.1 percent by next year, an all-time high. The
rate was 13.8 percent in 2007. Based on current unemployment rate
projections, the percentage of uninsured motorists is expected to rise
to 16.1 percent in 2010.

The group examined data collected from nine insurance companies,
representing approximately 50 percent of the U.S. private passenger
auto insurance market. According to the IRC, the estimates for
uninsured motorist activity were based on a ratio of insurance claims
made by individuals who were injured by uninsured drivers to claims
made by individuals who were injured by insured drivers. The study
contains recent statistics by state on uninsured motorists claim
frequency, bodily injury liability claim frequency, and the ratio of
uninsured motorists to bodily injury claim frequencies.

New York is not in as dire shape when it comes to car insurance as it
is with the economy. The Empire State is tied for the third lowest
uninsured motorist rate at 5 percent, 4 percent behind Massachusetts. New Mexico led all states with a 29 percent uninsured motorist rate.

Travelers Cos. Inc. reports that there has recently been a mild
increase in uninsured claims and warns against dropping insurance as a
way to save money. William Pearse, the St. Paul, Minnesota company’s
vice president of product strategy and design notes that it’s equally
important to carry liability insurance that covers people in the other
car and to have uninsured motorist coverage on your policy, which
protects you if the other car is not insured. The average cost for
liability insurance in the United States is about $40 to $50 a month.
Although costs can vary, uninsured motorist coverage typically adds
from 7 percent to 10 percent to an insurance premium. Drivers without
at least liability insurance are breaking the law in all but two
states.