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Sharing the roads with the uninsured

By Autumn Cafiero Giusti

Sharing the road with the uninsuredDiscussion has heated up among lawmakers and consumer advocates in recent years about how to address the prevalence of uninsured motorists on the road.

The Insurance Research Council conducted an in-depth analysis of uninsured motorist trends in 2014, and it estimates that as many as 1 in 8 motorists in the U.S. may be driving without auto insurance.

Driving alongside motorists who don't have auto insurance — or haven't purchased enough coverage — is "simply a reality of being on the road," says California personal injury attorney Barry Goldberg, who specializes in uninsured motorist cases.

Lawmakers in some states are pursuing legislation that would help minimize the number of uninsured motorists, while advocacy groups are promoting practices that states and insurers can adopt to make insurance more affordable.

The upshot of the study is that the rate of uninsured motorists has declined in the past two decades, falling from 15.6 percent in 1992 to 12.6 percent in 2012. 

Despite the decline, the total claim payment amount is up 75 percent over the past 10 years. An estimated $2.6 billion was paid in the U.S. on uninsured motorist claims in 2012, the most recent figures measured in the study.

State-to-state differences in uninsured motorists

The problem of uninsured motorists is more prevalent in some areas and varies from state to state. According to the IRC study, these states have the highest numbers of uninsured motorists:

• California: 4.1 million

• Florida: 3.2 million

• Texas: 1.6 million

Oklahoma had the highest percentage of uninsured motorists, 26 percent, while Massachusetts had the lowest at 4 percent. 

Douglas Heller, spokesman for the Consumer Federation of America (CFA), says that poverty is the biggest predictor of high levels of uninsured motorists. "Most people driving without insurance are not scofflaws who don't care or don't know about the rules," he says. "They simply can't afford to buy the auto insurance that's out on the market."

Being a highway-heavy state can further exacerbate the problem. "In California, you can't economically compete without a car," Goldberg says.

Eric Lin, a finance professor who studies insurance at California State University, Sacramento, says state initiatives such as the TexasSure Vehicle Insurance Verification program have helped curb the number of uninsured drivers. Texas maintains a database connecting every registered vehicle in the state by its license plate, vehicle identification number and liability insurance policy.

"I know it’s controversial, but I think these are important initiatives because they are enforcing the laws," Lin says. "You could come up with 50 new laws, but if states are not enforcing the laws they have, you're going to see the percentage of uninsured motorists stay about the same. You're not going to see results."

Searching for uninsured motorist solutions

In 2015, lawmakers in 18 states either introduced or considered legislation governing the use of automated license plate readers, according to the National Conference of State Legislatures. Some of those states are considering the use of these devices for insurance purposes. 

Automated license plate readers would make it possible to track drivers' movements as well as the date, time and location of vehicles as they pass, although they have raised concerns about privacy. They are already in use by about 600 local and state police departments and other agencies, according to the American Civil Liberties Union.

Heller contends that punishment might not be the right approach to ensuring more motorists carry insurance. He says that in 2014, CFA research found that there's no strong correlation between levels of uninsured motorists in a state and the harshness of penalties imposed on drivers without insurance, primarily because punishment doesn't address the poverty issue.

"If we can't punish our way out of the problem, we need to find more positive solutions that will allow drivers a real opportunity to get into the auto insurance market," Heller says.

Heller contends insurance companies shouldn't be allowed to base premiums on factors unrelated to driving history, such as occupation, level of education or credit score. "All of those factors push up premiums for low-income drivers and force more people to drive without insurance."

Heller says more states should consider creating a low-cost auto insurance policy like California's Low-Cost Auto Insurance program, which offers coverage to low-income drivers. "The program is not subsidized by taxpayers or other drivers, but it at least offers a chance for people who are struggling financially to comply with the mandatory insurance laws and protect other drivers on the road," Heller says.

In the meantime, both Heller and Goldberg say uninsured motorist coverage is the best protection drivers can obtain.