Stunning rise in drivers who have dropped or cut back on auto insurance

[Liberal_in_LA]

Economy leaves millions of drivers uninsured
Insurance industry study warns that 1 in 6 won’t be covered by end of year

By Alex Johnson
Reporter
msnbc.com
updated 3:16 a.m. PT, Thurs., April 9, 2009

Insurance regulators and safety activists are alarmed at what they describe as a stunning rise in the number of drivers who are cutting back or even dropping their auto insurance to save money during the recession.

“It’s been a shock,” said Chris Pringle, owner of All American Insurance Agency in Little Rock, Ark., who said up to 20 percent of his clients had dropped their policies or missed payments in recent months. “I thought we were somewhat in a recession-proof business, because (auto insurance is) required for everyone to have.”

Karl Newman, president of the Northwest Insurance Council, a trade association based in Seattle, warned that “we may be looking at record numbers of uninsured motorists across the nation.”

“When you see a multi-car collision on the freeway ... if there’s more than three or four cars there, at least one of them is likely to be uninsured,” Newman said.

Industry figures back up that concern. By next year, 1 of every 6 drivers on U.S. roadways is likely to be uninsured, according to the Insurance Research Council, a nonprofit group financed by the insurance industry. To calculate that figure, the council reviewed accident claims processed by insurers covering half of the nation’s drivers.

http://www.msnbc.msn.com/id/30093235/

[rpannier]

1. I think it's always been about that

Despite mandatory insurance, in many areas the premiums became way too high.

The whole thing was a racket to begin with.

I was in Sacto, CA when they first made it mandatory.
We were assured this would cause rates to go down -- they didn't
Then mine went up.
When I asked 'Why?' I was told because there were so many w/o insurance that I could wind up in an accident with an uninsured driver and they'd get stuck with paying for the whole accident.

Look for them to pull this stunt again and raise everyone's rates

[robinlynne]

2. But there is also another side to this. I think uninsured drivers should have their cars removed

until they show proof of insurance. I know it's rough but it is necessary. and would not be not so difficult to do. If you really can't afford to have a car you need to use public transportation. I dont know what I would do if an uninsured driver hit my car. I'm not earning any extra to pay for other people's follies, needless to say.

[flvegan]

5. In Florida, they can confiscate your tag/license plate.

Last I heard, there was a "whistleblower" reward program for folks that took the plates off cars of uninsured motorists.

Also, if you don't have insurance, your license is automatically suspended.

[robinlynne]

6. Here (ca) they can arrest you and impound your car, but they don't. Until AFTER

you are in an accident.

[kiva]

8. I agree.

If you can't insure your vehicle, you're putting the financial lives of other drivers on the line--way too many of us couldn't afford to replace or pay major repairs on our cars if an uninsured driver causes an accident. I have some control about what I do, not so much with other drivers.

Is it a scam? Yup, and so are many insurances, but that doesn't make it any easier if an uninsured driver totals my car.

[rpannier]

10. I understand that and don't disagree

But, they NEVER reduced the rates and then they raised them again because of all the uninsured drivers.
Yet, there were more uninsured before the mandatory than there were after

[ChazII]

3. That is what I was told as well.

Mandatory insurance was supposed to make my rates decrease but I have had the same experience as you.

[robinlynne]

7. I never heard that. I thought mandatory insurance was to protect the victims of accidents.

Auto insurance has to be mandatory.

[rpannier]

11. When it first was being proposed we were assured by the gov't and the insurance Companies

that this would cause the rates to go down because everyone would have it.

They never reduced the rates, they kept them flat. In areas of California, the rates were already appallingly high.

More people got insured anyway because it was mandatory

Then they had the nerve to raise everyone's rates because there were uninsured drivers on the road (even though there were fewer than before mandatory insurance)

[ChazII]

13. It was the argument that was made

when first introduced in AZ a number of years ago.

[Sebastian Doyle]

4. This is precisely why mandatory corporate "health care" WILL NOT WORK.

You can pass all the bullshit laws you want, but if you can't afford insurance, you can't afford it.

[kanrok]

9. For those who can afford car insurance, a little advice

In light of the fact that there are so many uninsured vehicles out on the roadway, it is important to protect yourselves.

The vast majority of premium dollars go to cover the first $20,000 in coverage. That is where most of the money is spent on damages in the US currently.

If you can afford the premiums for the minimum coverage, consider getting more uninsured/underinsured coverage for yourself.

In fact, get an umbrella policy that covers you in case some knucklehead in an uninsured vehicle crashes into you and causes catastrophic injuries.

A UM/UIM umbrella for $1M in coverage costs as little as $150 per year in addition to your standard coverage amount.

I highly recommend this coverage.

[robinlynne]

12. that's not a bad idea. I think if an uninsured motorist hits ud we canjust use our insurance, but th

your rates go up forever, don't they?

[kanrok]

15. It depends

Upon where you live, your driving record, your age, the type of car you drive, and the insurance company you choose.

There are other variables, but these appear to be the most common ones.

Some insurance companies are just better than others, and the cheapest is not necessarily the best.

My rates have stayed pretty stable for the last five years (I maintain $5M in umbrella UM/UIM coverage)

BTW some companies do not offer umbrella UM/UIM coverage (for instance, State Farm used to, but they don't anymore).

Check with your agent.

[mwooldri]

14. UK had such a problem with uninsured motorists they introduced some drastic legislation.

Traffic cameras these days can read your license tags... (number plates in the UK). If one of these devices reads your plates and find you don't have insurance you first get sent threatening letters. Then they seize your vehicle if you still don't act, and if the car is of low value, it gets destroyed.

If you actually get stopped by the police and found to have no insurance then it's a hefty fine, 6 points on your license and yep, car may be crushed too.

Bottom line: drive a car, get insured. Period. Even if it's just the State minimum.

I have more because the car's financed and the bank (State Farm of all people) require comprehensive & collision insurance on the vehicle (happens to be with State Farm because for us it's the best deal but State Farm Bank doesn't require their financed vehicles to be insured with State Farm). Premiums not too bad but then we have points. Luckily in NC we do have a quite an aggressive insurance guy so premiums are under control here.