Counting The Cost Of Uninsured Drivers

by Guest Contributor

There is a cost of uninsured driversThere’s no denying it: car insurance is pricey, and the cost goes up year on year. Add to that the impact of the global economy, and some decide that they’ll simply drive around without car insurance and save themselves $1,000 or more. They figure that it’s a victimless crime, but they would be wrong. We are picking up the cost of their negligence.

There is a cost of uninsured drivers in America. The cost of uninsured drivers raises others insurance premiums.

Worse For All Of Us

In 2007, uninsured drivers cost the rest of us over $10 billion, and 13.8 per cent of Americans are estimated to be uninsured. This sparks off a vicious cycle of repetition – as insurance premiums go up, more people will decide to drive without insurance, which will push premiums up further. By contrast, 5% of UK drivers are uninsured and cost over $3 billion (£2 billion) in higher premiums for law-abiding drivers. Most European countries have less than 2% of their drivers without insurance.

Legal Requirement

This is a bit of a no-brainer, but driving without insurance is against the law. With the exception of New Hampshire, all states require your vehicle to have car insurance in order for you to drive it. The exact law varies from state to state, but being caught driving without insurance can land you with a hefty fine (anywhere from $50 in North Carolina for a first offense to $1,000 in Illinois).

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You could also have you license suspended (and have to pay a fee to get it back) and in some states driving without insurance could land you in jail. Some states also require you to provide proof of insurance to police officers on demand, so getting caught will land you in a world of trouble.

Personal Cost

The whole purpose of car insurance is that, in the event of an accident, both parties can be compensated for damage and injury. If you’re hit by an uninsured driver, who’s going to compensate you? Many car insurance policies include an ‘Uninsured Motorist Clause’ as standard (this clause is mandatory in some states) that allows you to receive damages from an uninsured driver.

Otherwise you’ll be left to pay for the damage to your car yourself, and any injuries that you’ve suffered will go uncompensated. You could file a lawsuit against the uninsured driver and reclaim your damaged from them personally, but this is unlikely to bear any fruit. In most cases, the reason a driver is uninsured is because they’ve not the means to afford it. If this is the case, they won’t have the means to afford to pay your damages, so you’ll still have to foot the bill.

Some states have a relatively low rate of uninsured drivers thanks to their enforcement policy. In Massachusetts, drivers are required to show proof of their insurance coverage before they can register a vehicle. Other states have a more lax enforcement policy, and combined with the selfishness of some drivers it looks like we’ll continue to pay more than we should for a while to come.

This article was written by Jamie Gibbs on behalf of Confused.com. Head over to the site and find out how much you could save on your car insurance today.

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Guest Contributor has written 240 articles on Money Q&A. Learn more about Money Q&A on Twitter @MoneyQandA and @HankColeman.


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{ 12 comments… read them below or add one }

WorkSaveLive

I didn’t realize the percentage of uninsured drivers was that high!

Interesting post. Not having auto insurance could really lead people into a world of hurt. If they’re ever got into an accident and injured the other driver, then there is no doubt that person is going to end up bankrupt.

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Jai Catalano

I actually was in an accident with a driver that was uninsured. In addition he was drunk and the cops did nothing to him. I got screwed out of the deal with a banged up car. Luckily I was perfectly fine.

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Einstein

My state lets me opt out of un- or under-insured motorist coverage for myself if I want to. I think you would have to be mad as a hatter to opt out, though.

Un- and under-insured motorists are everywhere. I find it silly to buy a lot of insurance for other people (in at-fault states) and then pass up the cheapest insurance of all – insurance for yourself for un- or under-insured drivers!

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Jackie

Unless the law has changed since I last read about it (which is certainly possible) here in Arizona you either have to have a minimum level of coverage OR a minimum level of money in your bank account. However, the minimum level of coverage required is pretty low — not really enough if you say, hit a brand new SUV. I always keep uninsured and underinsured coverage on my policy for that reason.

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Edward Antrobus

Colorado also lets you opt out of uninsured coverage, which I do. It is one of the states where you have to prove insurance coverage to register a car, so I’m not particularly concerned.

Frankly, I believe that the reason that insurance costs are so high is because garages routinely rip off insurance companies. Last year, I was involved in an accident, and the other car received a scratch on the rear bumper. My insurance company paid out a $600 claim!

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Hank

One problem with that though, Edward, is that “hit and run” accidents are considered uninsured motorists too. So, if someone hits you and runs off, you could be responsible for 100% of the costs of your repairs instead of simply your deductible.

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Joe

In Ontario (Canada), the government guarantees insurance companies a return of over 10% on their equity. That’s despite the fact that bonds are averaging about 2%. Shameful socialism for big biz.

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Paul @ The Frugal Toad

We not only carry uninsured coverage but we also carry underinsured coverage. Phoenix has one of the highest rates of uninsured drivers in the country. Don’t get me going Hank, sore subject!

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Elizabeth @ Simple Finance

I just don’t understand why more states don’t follow Massachusetts’ lead – it is so unfair to the rest of us to have to pay for someone else’s negligence. (insert angry fist-shaking here)

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Hack @ Smart Money Hacks

I made sure to add under-insured and uninsured coverage to my policy. The last thing I want is to get screwed by someone who hits me that doesn’t have insurance!

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Marissa @ Thirtys Six Months

We need insurance to operate vehicles in Canada, and even though I pay a ridiculous amount for insurance, I don’t think I would dare drive without it.

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Gerry @ how much do it cost

Uninsured drivers cost at the least £400 million every year , quite as well as emergency providers and court court costs.

Reply

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