Slumping Economy Means more Uninsured Motorists

A recent survey from the Insurance Research Counsel states that hundreds of thousands of driver have let their insurance lapse because of financial hard times. As the jobless rates climb, so will the number of people choosing to go uninsured. The story is the same, “which bill do I pay the insurance or the electric?”

The trend is bad news for everybody on the road. If you're hit by an uninsured motorist, you may have to sue to recover costs, and many uninsured motorists have few assets. You can protect yourself by carrying uninsured-motorist coverage -- almost half of states require the added coverage -- but this may boost your premium.

Many of the people on the road are either uninsured or underinsured, and so you have to protect yourself. Your odds of being in an accident with an uninsured driver are substantial.

One of my clients had a down turn in his business and reduced his coverage to a bare minimum to save costs. Against my advice, he cancelled all covergaes except liability. As you can probably guess, he was hit by an uninsured driver, who then fled the scene. In tough economic times, he now has substantial damage (in excess of $10,000) that he has to pay. To make matters worse, he was injured.

Motorists driving without insurance also face risks. If you are found at fault for the accident and a judgment is awarded, a court could order liens on you assets. If you don’t have attachable assets, you could be set up on a court ordered “payment plan.” Also, driving without insurance is illegal in 48 states and the District of Columbia.

It’s an ugly situation, so before you decide to let all you policies lapse, talk to you agent. There are often things that can be done to ease the financial pressure without sacrificing your long term financial future.