The Road Gets Riskier

As job losses mount and auto insurance premiums go higher, more motorists are driving without insurance, making the chances of being involved in a crash with an uninsured driver a lot higher. A study done a few years ago found that about 15% of motorists were uninsured nationwide—numbers that are most likely even higher now as the recession deepens, and despite the fact that driving without insurance is illegal in 48 of the 50 states and the District of Columbia. Even more drivers may be underinsured, having stripped their insurance policies down to the minimum coverage needed to drive legally.

If you’re in an accident with an uninsured or underinsured driver, you may have to sue to collect damages. Even if you win, the odds of collecting anything may be slim since most motorists who drive without insurance have few assets. One answer is to add uninsured-motorist coverage to your auto insurance policy, which will also add about 7% to 9% to your premium. In about 20 states, this type of coverage is mandatory.

In addition to violating the law, drivers who let their auto insurance lapse risk losing whatever assets they have if they are in an accident. They are also likely to pay more if they try to get a new policy. Insurance companies often slap a surcharge on premiums for drivers who can’t prove that they have had continuous coverage, since they consider them at higher risk for accidents.