As the recession continues to affect more Americans, more drivers are cancelling their car insurance policies, playing a risky game when they do get behind the wheel.
Several hundred thousand drivers dropped their insurance in the past year as the unemployment rate increased, estimates a study to be released next month by the Insurance Research Council, the Wall Street Journal reports.
"I am seeing a lot more canceled policies than ever, especially in the last couple of months, usually due to job loss," said Christine Williams, a licensed agent at Insurance.com.
Also, driving without insurance is illegal in 48 states and the District of Columbia. The only states that don’t require insurance are New Hampshire and Wisconsin; these states require drivers to show proof of the financial ability to pay damages for liability.
If you get hit by an uninsured driver and you don’t have uninsured motorist coverage on your own car insurance policy, you would be up a creek without a paddle. Without the coverage, you would have to go to court and sue the driver who hit you to recoup any car repair or medical bills.
With uninsured motorist coverage, your insurance company handles all this for you. You pay your deductible and your insurance company pays to get your car fixed and also has lawyers who will go to court for you to recoup the company’s money from the driver who hit you. They usually are able to get your deductible from that person too, so you eventually get that money refunded. Although it will increase your yearly premium to have this coverage, it is worth the money for a lot of drivers. About half of all states actually require it.
Job losses and auto insurance rate increases reportedly are the two main factors contributing to drivers who drop the insurance altogether, or just pare their policy down to the bare minimum level of liability required for their state.
For those who choose to drive without insurance, they could lose any assets they own if they hit someone and get taken to court. Also, if they let their coverage lapse, they usually have to pay an initial 25% to 50% surcharge for a new policy. Insurance companies charge them more because they consider them irresponsible.
We understand that with no job, people have to cut all non-essential expenses. But having car insurance is the law people!