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More Drivers Dropping Insurance Coverage

On behalf of posted in Insurance Issues on Monday January 24, 2011

With an uncertain economic future, people tend to examine different areas in which to save money. Unfortunately, a recent study suggests that more and more drivers are dropping auto insurance in this effort.

In 1999, a study by the Insurance Research Council (IRC) found that 13 percent of drivers were uninsured. A similar report in 2003 found that number had spiked to nearly 15 percent. The IRC now predicts that number to grow even higher in 2010.

The most recent IRC study notes a strong correlation between unemployment numbers and the number of uninsured motorists. Specifically, the IRC found that an “increase in the unemployment rate of one percentage point is associated with an increase in the uninsured motorist rate of more than three-quarters of a percentage point.” Calculating current unemployment numbers and projections, the IRC expects 16.1 percent of all drivers to be uninsured this year.

According to Edmunds, every state, except New Hampshire and Wisconsin, requires drivers to carry liability insurance. Though the amount of coverage can vary from state to state, the required coverage typically covers three areas:

  • Bodily injury for one person in an accident
  • Total bodily injury for all persons injured in an accident
  • Property damage liability for one accident

In Massachusetts, drivers are required to carry coverage for $20,000 single bodily injury coverage, $40,000 in total injury, and $5,000 in property damage. The Massachusetts insurance coverage minimums are not the only option for drivers. Often residents opt for auto insurance policies that are much higher. It is not uncommon to see auto insurance policies with a coverage ratio of 50/100, 250/500 and even $1 million in coverage. Commercial vehicles are often covered with even larger policies as well.

Massachusetts also requires drivers to carry personal injury protection (PIP) and uninsured motorist coverage. Personal injury protection policies not only helps pay for hospital and medical bills, but also helps cover any lost wages from an accident under your own policy. Child care and funeral expenses can also be covered under PIP policies.

Dealing with an insurance company after a car accident can be a frustrating experience and you may not receive the coverage you are entitled to if you deal with them alone. If you have been in an accident, it is important to work with an experienced attorney to make sure that your interests are protected.

Related Resourece: Edmunds “How Much Car Insurance Do You Need”

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