More Americans Are Driving Uninsured, Study Finds | Insurify

Factors causing drivers to forego coverage

Historic job losses in 2020 due to the COVID-19 pandemic and an increase in remote work during and after the pandemic prompted many Americans to opt out of buying car insurance coverage, the IRC report said. Following the pandemic, car insurance prices rose dramatically, Insurify data shows.

Rates rose 24% across the country in 2023 and could increase another 7% this year, data analysts said. Sixty-three percent of drivers in a recent Insurify survey said they saw their premiums increase at least once (41%) or more than once (12%) in the past 12 months. Nearly 3% of survey respondents said they canceled their car insurance altogether to cut costs.

Every state (except New Hampshire) and Washington, D.C., require drivers to carry at least a minimum amount of liability coverage. In all, 20 states and Washington, D.C., require drivers to have some level of uninsured motorist coverage, adding to insurance costs.

Drivers residing outside those 20 states can purchase uninsured motorist coverage as an optional add-on.

Uninsured drivers increase rates for everyone

Washington, D.C., New Mexico, and Mississippi recorded the highest rates of uninsured drivers in 2022, according to the IRC. Wyoming, Maine, and Idaho produced the lowest rates.

The increase in uninsured drivers appears to be affecting rates for insured drivers as well.

In New Mexico, where 24.9% of drivers are uninsured, the average for full-coverage insurance is $138 per month, according to Insurify data. By comparison, the average full-coverage rate in Idaho, where just 6.2% of drivers forgo insurance, is $109 per month. The national average for full coverage is $187 per month.

“The pandemic appears to have caused a jump in the percentage of drivers choosing to forgo required insurance, adding to the insurance costs for everyone else,” explained IRC president Dan Porfilio in a press release announcing the report.

Accidents with uninsured motorists

States treat accidents involving uninsured motorists differently, depending on whether the state is an at-fault or no-fault state.

In an at-fault state, the liability insurance of the driver responsible for the crash covers the property damage and medical expenses of the other parties. Uninsured drivers who cause an accident are still financially responsible for the damage and injuries they cause, and they could find themselves in court.

In the 12 no-fault states, a driver’s insurer pays the medical costs for its policyholders, regardless of who caused an accident. However, payout for damages to the vehicle is still the responsibility of the at-fault driver.

If an at-fault driver is uninsured, they’re responsible for paying their own medical bills and property damage. They’re also entirely financially and legally responsible for any damages and injuries they’ve caused to others.

Penalties and impact on uninsured drivers

Drivers who forgo state-mandated car insurance face penalties that can include hefty fines, license and registration suspension, and possible jail time, depending on the state. Additionally, uninsured drivers are entirely responsible for their own financial losses following an at-fault accident. Some states even have “no-pay, no-play” laws that prevent uninsured drivers from recouping damages from an at-fault driver’s car insurance.

What’s next: Staying safe on the road

Insurance is a legal requirement nearly everywhere in the U.S. Drivers should take steps to ensure they have at least their state’s minimum required amount of coverage.

In at-fault states, drivers can purchase uninsured motorist coverage to protect themselves if they’re in an accident with an uninsured motorist.

In no-fault states, each driver’s insurance company pays for bodily injury losses but not property damage. Drivers then may consider adding uninsured and underinsured motorist coverage to cover property damage in the event of an accident.