The Great Recession led to an increase in auto insurance risk on America's highways, according to two new reports.
The latest estimates by the Insurance Research Council indicate that one in seven drivers nationally have no auto insurance at all. The number of uninsured had been in a four-year decline before rising to 14.3 percent in 2008, then dipping slightly to 13.8 percent in 2009. Your chances of encountering an uninsured driver jumps to one in four in Mississippi, Tennessee, New Mexico, Oklahoma and Florida.
If you are unfortunate enough to be involved in a traffic accident with an uninsured motorist, you and your auto insurer could be stuck with the entire bill for damages to your vehicle, bodily injury to yourself and other passengers and property damage caused by the crash.
Hard times also prompted a lot of motorists to cut back on their auto insurance coverage in order to shave a few bucks off their premium.
According to a new study by auto insurance analytics firm Quality Planning, the number of motorists who chose not to purchase collision or comprehensive coverage increased sequentially from 2006 to 2010. Collision pays for vehicle damage caused by an automobile accident; comp pays for covered costs not caused by an accident, including theft, vandalism, falling objects, animal damage, storms, fire and flood.
Owners of older vehicles, defined as 10-plus years older than the statistical year, were more likely to drop collision and comp coverage. The percentage of vintage rides without collision or comp rose from 53 percent to 63 percent over the period, at an average annual savings of $229. By contrast, most drivers of new vehicles retained these coverages, either because of the expense to repair a new or expensive car or because the lienholder (bank, credit union, etc.) required it.
Even those with complete auto coverage chose to take more risk on themselves by raising their auto insurance deductible. Between 2006 and 2009, there was a decline of about 9 percent in those carrying low collision deductibles (below $250), while those with higher deductibles ($250-$500 and $500-$1,000) increased between 1.6 percent and 4.9 percent each year. However, new car owners tended to choose lower deductibles to protect their investment.
Were you among those who assumed more personal risk by cutting back on your auto insurance to weather the economic downturn? If so, have you had cause to regret it?
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