Auto insurance experts aired concerns in recent weeks about the alarming increase of car owners slashing insurance coverage to save money. While not illegal, cutting back on car insurance protection can have dire consequences, they argue. Many motorists who decide to lower insurance coverage or even completely do away with insurance can find themselves taking unnecessary risks and serious consequences.
The slow economy is forcing many American motorists to resort to risky practices in order to scale down insurance expenses and hopefully save money. Experts, however, warn that skimping on essential insurance coverage can mean shelling out more money in the future if car owners get into accidents.
More and more drivers are choosing to lower their insurance coverage while other are deciding to drop their coverage altogether. By opting for lesser protection, car owners can be exposing themselves and their families to more risks, ultimately defeating the purpose of insurance.
Most states have minimum liability coverage amounts that motorists have to comply with. Despite this, specialists contend that sticking to the minimum amount may not be enough to cover medical and repair expenses in the event of an accident. Rising medical costs often demand higher liability amount from policyholders. Not having adequate or more than enough coverage can mean risking personal assets if a policyholder is sued. Experts recommend increasing liability coverage to acceptable amounts to cover for any eventuality.
Worse, some drivers choose not to renew their insurance at all. A recent study conducted raised alarm over the increasing number of motorists driving without insurance. The unstable job market is also making analysts jittery because unemployment figures are often closely tied to the number of uninsured drivers. Higher jobless figures will eventually mean more uninsured car owners. In fact, the state of California recently reported that if the current trend continues, it is expecting to see 20 percent of its motorists driving without any insurance by 2010. In some states, the figures are much higher, up to 29 percent in New Mexico.
Insurance analysts say that the trend, if left unchanged, can result to a domino effect. They point out that if the number of underinsured and uninsured drivers continues to rise, then insurance providers would be forced to increase premiums in anticipation of more accidents involving these particular motorists. While the U.S. is enjoying relatively low insurance premiums average at the moment, with the average rates at $1,871, premiums can rise significantly if more car owners decide to reduce their coverage or drop them completely.