Insurance experts are alarmed that among the many approaches taken by people to save money during these times of recession, compromising on auto insurance coverage is one of them!
Owner of an Arkansas auto insurance firm, All American Insurance Agency, Chris Pringle says “I am shocked at this development since until this time I believed I was in an industry that could not be affected by the economic downturn since auto insurance is not a matter of choice but a mandate”. He also mentioned his surprise at the fact that the number of policy holders who missed their payments or canceled their policies rose to an alarming 20%.
President of a Seattle based trade association called Northwest Insurance Council, Karl Newman, has cautioned that the number of people driving without valid auto insurance policies across the United States will progress north. He also says “One among the cars involved in a multi car accident on a highway is bound to have a lapsed insurance policy”.
According to the current data on hand, a nonprofit group Insurance Research Council states that by the onset of the next year, the number of uninsured drivers on the road will increase to 16%. More than 50% of the accident claims that were processed by insurance companies were analyzed to arrive at this figure.
Excluding Wisconsin and New Hampshire, the other 48 states have made liability insurance a mandate for all car owners and for a number of years now, the percentage of people without them had fallen to 13.8% until last year when it rose suddenly to 14.6%. As per the Federal Highway Administration, this translated to 33 million drivers without this coverage across the United States.
Steve Ellis, a deputy Sheriff in King County who is also a driving instructor says “As police officers, we apprehend such people all the time. Such drivers are not only risking their money but putting the lives of others at stake as well”.
High stakes for low returns
Research council’s senior VP, Elizabeth A Sprinkle said that the current happenings can be directly attributed to the skewed economy.
The rate of uninsured motorists rose by three quarters of a percents every time there was an unemployment rate increase of 1%. Calling it an unfortunate outfall of recession, Sprinkle also said that is clearly displayed the impact of poor economy on the lives of people.
Ace Insurance Agency’s agent Tommy Manzullo states that his clients told him that rent and food were of greater concern than their auto insurance premiums whenever he called them to remind them of their dues.
However, industry experts say, irrespective of the economic situation, driving without a legally valid auto insurance coverage is one of the most foolish things to do. As per the data collated by National Association of Insurance Commissioners, the average monthly cost of an auto insurance coverage in 2007 was $72.25 and compromising on it could result in a larger financial burden than this amount.
AAA’s spokeswoman, Elaine Zeinner, says “Suspended license, penalties, legal fees and fines are some of the risks uninsured motorists tend to face”. This is excluding the huge repair bills and hospital and medical costs in case of any mishaps. You will also end up paying the charges for the injuries to other passengers if you belong to a no fault insurance state, thus, emptying all your hard earned money.
Travis Bennett, an agent with the Redmond, Ohio based insurance company, AIC insurance says “If someone sues you for medical and repair costs caused in an accident, then, you might also end up having to sell your house to cover them”.
Negative long term impact
Evansville, Indiana’s State Farm Insurance company’s agent, Bon Davis says “Being underinsured can be financially scary. Though they are eliminating comprehensive coverage and knocking off close to $14 from their premium, it is going to be disastrous in the long run”.
Brian Hazelrigg, an agent with Columbia, Missouri’s State Farm Insurance, mentioned that most drivers have to pay through their nose for repairs even if they hold policies that meet the state specified legal requirements.
The organization that represents the company in all states of the US, the National Association of Insurance Commissioners, said most policy holders are unaware of their insurance coverage terms. This is because most of them don’t go through their policies at all and more than 50% take a look at the policy only during renewal or when they want to change.
You can still save money on auto insurance when you compare rates online with Insuriffic.com.