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Report: One in Seven Drivers Do Not Have Car Insurance

According to a report released by the Insurance Research Council (IRC), over 14 percent of all drivers on U.S. roads are driving without any kind of car insurance, in spite of laws in most states making auto liability coverage mandatory. What's more, although that number had been dropping through the middle years of the decade through 2007, it is back on the climb. The IRC is predicting that one out of every six drivers on the road will be uninsured by the time 2010 gets going [1], a staggering figure. What it means to those of us who drive legally with proper liability coverage is that we have a one in six chance of having to deal with an uninsured driver if we get into an auto collision.

Consequences of IRC Findings

Under normal circumstances, if you are hit by an at-fault driver in an auto accident, the at-fault driver's liability insurance will pay for the cost of damages to your vehicle and for the medical expenses associated with any injuries you might have suffered as a result of the accident. However, when the at-fault driver is uninsured, the only way for you to extract compensation from an insurance company for your expenses is through your own uninsured motorist coverage. This is a specialized form of elective coverage offered by providers for just this sort of circumstance.

Uninsured motorist coverage is strictly optional for all car insurance policy holders, but it is an important part of an overall package of coverage, and a crucial endorsement worth considering. It is highly aggravating for all of us who make it a point to keep up with our coverage and carry legally binding insurance policies, to think that this area of protection is even necessary. It's upsetting to have to fork over money for the kind of protection that should already be built in to the other vehicle's insurance coverage. But the reality is that we are better off with this coverage than without.

In most cases, adding uninsured motorist protection will tack on a few hundred dollars to the overall annual cost of your stable of car insurance coverage. That number seems disheartening because it can seem like wasted money thrown away because of someone else's bad choices. On some levels, admittedly, this is true: none of would have to carry uninsured motorist coverage if no one drove around on U.S. roads with no insurance. But we all know that there are many uninsured drivers on the roads at any given time; the IRC report is just the latest reminder informing us of our need to protect ourselves.

Reasons for High Uninsured Rates

According to the IRC, the uninsured motorist rate has historically shown a strong correlation to the national rate of unemployment. This connection seems intuitive enough. But there are other factors influencing drivers to choose not to carry auto insurance on their vehicles. There are plenty of drivers on the roads who are employed, yet have no insurance. In times of national economic duress, while unemployment numbers are high, underemployment is also a big issue.

With jobs scarce and companies struggling to survive, many workers are forced to take cuts in pay and benefits to keep their jobs. Others are laid off or let go, forced to take whatever job they can get just to keep money coming in. for this reason, especially during economic downturns, even unemployment figures do not tell the whole story, because a large percentage of those still holding down jobs are simply not bringing enough in to make ends meet. Many are forced to make tough choices they would rather not make, having to prioritize how to spend what little income they do have. Auto insurance is a lower priority than as in the car to get to work or food for the children, so it is sometimes a victim of hard times. And so the uninsured numbers tend to swell when times are tough.

Uninsured Only Part of Problem

But the 16 percent of the nation's drivers the IRC expects to be out on the roads are only a part of the group representing a threat to the rest of the driving population. For all the uninsured drivers out there, there are at least as many underinsured drivers on the roads. For the purposes of this discussion, an underinsured driver is simply someone who does not carry enough auto liability coverage to pay all the costs associated with a typical at-fault injury accident. Underinsured drivers are so prevalent across the country that they have forced car insurance providers to dedicate a whole separate area of coverage to protect policy holders from the financial effects of being involved in accidents with them.

Uninsured and underinsured motorist coverage are two separate and distinct parts of your overall stable of auto insurance protection, but they both work in similar ways and are targeted to work on your behalf in similar situations. If you get into an accident with someone who carries no personal auto liability coverage and that person is found to be at fault in the accident, you have little recourse to try and get repaid for the financial cost of the wreck on your end.

You could sue the person and try to get access through the courts to their assets in an effort to get repaid. But in all likelihood, this sort of effort will be extremely time-consuming and costly for you, with no guarantee that your efforts will be to any avail. You might have to miss work, pay lawyer fees and spend a great deal of your personal time on the case, only to be denied. And in other cases, you might win your case, but never see the money you are owed due to the near-impossibility of enforcement. Clearly, the prospects of having to go through this kind of experience do not bode well for most of us.

Fortunately, a simple uninsured motorist endorsement on your auto policy can help you avoid all this trouble. Underinsured motorist protection works in a very similar way, except it works as a secondary source of compensation to be paid out only after the at fault driver's liability coverage has been exhausted. If you are hit by a driver who does have coverage, but only at the state minimum level, your underinsured coverage can help prevent you from having to foot the rest of the bill on your own.

The Insurance Research Council and other organizations have consistently found in their studies that uninsured motorists persist on America's roads in spite of efforts by the industry and by law enforcement agencies to deter them from making the choice to drive without coverage. In a down economy, our instinct might be to cut out coverage like uninsured and underinsured motorist insurance, but the truth is in times like this that very coverage is more important than at any other time. If you have to write a check for your auto insurance, you might as well do it knowing that you really are protected. Adding uninsured/underinsured coverage makes your overall policy more well-rounded and complete.

[1] http://www.ircweb.org/News/IRC_UM_012109.pdf Retrieved 2009-12-30.

 

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