The Cost of Being Uninsured

A recent report shows that while the number of uninsured motorists on the road has decreased in the past decade, the cost of being uninsured has sharply risen.

The report, titled “Uninsured Motorists, 2014 Edition,” shows that the percentage of uninsured U.S. motorists fell to 12.6 percent in 2012 from nearly 15 percent nine years earlier. However, the report estimates that $2.6 billion was paid to cover uninsured motorist claims in 2012 – a 75 percent increase over the 2003-2012 period studied. That number, according to the report, only accounts for bodily injury payments and not property damage. There are roughly 30 million uninsured motorists in the U.S. – a number that represents roughly one in eight drivers.

The report doesn’t offer a clear reason for these numbers; however, the economy seems to be at play. Researchers noted that, leading up to the most recent recession, a 1 percent increase in the nation’s unemployment rate correlated with a .5 percent increase in the number of insured motorists. Yet during the recession, the ratio of uninsured motorists to bodily injury claims slightly decreased.

In addition, the report shows that some states with higher unemployment rates have higher ratios of uninsured motorists to bodily injury claim frequency. These states include Oklahoma, Mississippi, Florida, New Mexico, Michigan and Tennessee. Also, some of the most populated states have higher numbers of uninsured motorists, including:

• California (4.1 million)
• Florida (3.2 million)
• Texas (1.6 million)
• Ohio (1.3 million)
• Tennessee (1.2 million)

“Motorists who forgo purchasing insurance create a problem that is of great concern to auto insurance policyholders, insurers, regulators and the general public,” the report states. “In addition to paying for insurance that covers their own actions, insured drivers pay a portion of the costs incurred by drivers without insurance through uninsured motorist (UM) coverage. For insurers, costs associated with UM claims can be substantial.”