More Motorists are Dropping Insurance. Guess Who Pays the Price; An Increase in Uninsured Drivers Is Pushing Up Costs for Everyone Else

More motorists are dropping insurance. Guess who pays the price?

Uninsured motorists are on the rise, and they are driving up the cost of auto insurance for the rest of us.

The car insurance industry is caught, analysts say, in a vicious cycle of spiraling costs. Car insurance costs have surged by 52% in three years. Rising premiums are prompting more motorists to drop insurance, and their choice is pushing up premiums for other drivers.

The share of motorists without insurance rose from 11% in 2019 to 14% in 2022, the latest data available, according to the nonprofit Insurance Research Council.

Initial data for 2023 suggests the share of uninsured motorists continued to rise, a council spokesman said. And survey data from J.D. Power shows a further upward trend in the first half of 2024.

“We’ve gone now 2½ years of pretty historic increases in auto insurance premiums,” said Stephen Crewdson, senior director of insurance business intelligence at J.D. Power. “Some households are really struggling to make that payment.”

The rise in uninsured motorists began in the pandemic

Uninsured motorists were trending mostly downward in the 2010s. The trend reversed in 2020 with the arrival of the COVID-19 pandemic: Americans drove less, and some chose to drop their coverage.

In the years since, auto insurance rates have gone through the proverbial sunroof. Prices spiked for new and used vehicles alike, owing to supply chain disruptions and other factors. Prices rose for replacement parts and labor. Accidents increased in frequency and severity. Motor vehicle thefts ticked up. --->READ MORE HERE

Photographs by Rory Doyle for WSJ

An Increase in Uninsured Drivers Is Pushing Up Costs for Everyone Else

Number of drivers without car insurance has risen since the start of the pandemic

More Americans are driving without car insurance, and it’s making coverage more expensive for everyone else.

The problem has been growing since the start of the Covid-19 pandemic, according to the Insurance Research Council, whose latest data show the percentage of uninsured drivers rose to 14% in 2022, from about 11% in 2019. The IRC, which calculates the data based on the relative frequencies of auto-insurance claims, expects the numbers have continued to climb since then.

Washington, D.C., New Mexico and Mississippi are among the jurisdictions with the highest share of uninsured motorists, the IRC says. Washington has recorded almost 19,000 uninsured vehicles since 2021, according to a spokesperson at the district’s department of motor vehicles. In Ohio—ranked 10th on the list—the number of noncompliance suspensions increased 16% between 2020 and 2023, according to the state’s Bureau of Motor Vehicles. Such infractions occur when a driver fails to show proof of insurance at a traffic stop or after an accident.

J.D. Power, which bases its research on consumer surveys, sees a similar trend and says the percentage of uninsured drivers increased in the first half of this year.

When more cash-strapped consumers drop their coverage, it reduces the premium pool, which causes many insurers to raise the prices of their policies. The average annual cost of full-coverage car insurance has jumped to $2,278, up 12% from 2023, according to Bankrate.

Although many of the drivers dropping coverage say they are also battling rising costs for groceries, housing and healthcare, others are rolling the dice and betting they won’t need it.

More Americans appear to be unhappy with their current policies. The number of consumers shopping for car insurance surged in May to the highest level since 2020, according to J.D. Power. There is a greater chance that some might drop their coverage when shopping for a new policy, said Stephen Crewdson, the firm’s senior director of insurance business intelligence.

In all states but New Hampshire, driving without coverage is illegal. States and cities are attempting to crack down on the rise in uninsured drivers by increasing penalties or making their laws more stringent.

“I wish that people understood that it really places them at risk,” said John Mesirow, a personal-injury lawyer in Washington, D.C., who has seen an increase in claims involving uninsured drivers. “But if you have to choose between paying rent and getting food and car insurance, it’s obvious what you’re going to pay for.” --->READ MORE HERE (or HERE)

If you like what you see, please "Like" and/or Follow us on FACEBOOK here, GETTR here, and TWITTER here.