The Unseen Cost of Uninsured Drivers:
How a Growing Trend is Impacting Your Wallet
In the wake of the COVID-19 pandemic, a troubling trend has emerged on American roads: more drivers are going uninsured, driving up insurance costs for everyone. According to the Insurance Research Council (IRC), the percentage of uninsured drivers rose from 11% in 2019 to 14% in 2022, and is anticipated to continue rising.
The rise in uninsured drivers is not evenly distributed across the country. States like Washington, D.C., New Mexico, and Mississippi report the highest rates of uninsured motorists. For instance, Washington, D.C., has seen almost 19,000 uninsured vehicles since 2021. In Ohio, noncompliance suspensions, which occur when drivers fail to show proof of insurance, have increased by 16% between 2020 and 2023.
J.D. Power’s consumer surveys corroborate these findings, indicating a rise in uninsured drivers in the first half of 2024. As more consumers drop their coverage due to financial strains, the pool of premiums shrinks. This reduction forces insurers to raise prices, causing the average annual cost of full-coverage car insurance to spike to $2,278, a 12% increase from 2023.
Economic Pressures and Tough Choices
For many, the decision to drop car insurance is driven by rising living costs. Groceries, housing, and healthcare expenses are forcing drivers to make tough economic decisions. Dale Porfilio, president of IRC, notes that some consumers are prioritizing immediate financial demands over insurance.
Driving without insurance is illegal in all states (except New Hampshire). Despite this, the economic pressures are leading many to risk penalties, which can include fines, license suspensions, and even jail time.
The consequences extend beyond individual drivers. Policyholders collectively paid $16 billion for uninsured and underinsured motorist coverage in 2020, up from $13 billion in 2016. This type of insurance protects against vehicle wrecks with drivers who lack adequate coverage. Tow truck companies are also feeling the strain. Robert Ward, owner of Ward’s Wrecker Service in Mississippi, reports holding around 2,500 cars involved in vehicle wrecks with uninsured drivers across his seven locations.
States Respond with Stricter Laws
In response to this growing problem, states are tightening laws and increasing penalties. Maryland and Virginia recently implemented stricter auto-insurance laws. Maryland raised fines for uninsured motorists to $200 from $150, while Virginia made liability coverage mandatory as of July 1, 2024.
Michigan offers a potential blueprint for other states. The state implemented an auto-insurance reform law in 2019 which reduced the requirement for unlimited personal-injury protection. As a result, Michigan has seen a 6% decrease in uninsured drivers between 2020 and 2022.
As more Americans grapple with financial hardships, the trend of driving without insurance may continue. While states tighten laws to mitigate the issue, the burden on insured drivers and the broader insurance market is likely to persist. The growing number of uninsured drivers hurt all of us, so follow the law and keep all vehicles insured. Understanding the widespread effects of uninsured driving is crucial for policymakers and consumers alike, as they navigate this complex and costly challenge.
We at the Herd Law Firm, PLLC, are drivers, walkers, bicyclists, and motorcycle riders, too! We support other drivers, pedestrians, bikers and motorcyclists injured or killed on the road, and have successfully represented such victims seeking the assistance and compensation they so need and deserve.
7/26/2024
