Even with the U.S. economy showing signs of an early recovery from the economic recession, more and more Americans are still cutting back on car insurance. Worse, some drivers are even choosing to drop coverage just to save money. Experts say that doing so can have severe consequences especially since statistics indicate that the number of uninsured drivers is increasing dramatically with the rising unemployment rate.
In fact, some states like California expect the number of uninsured motorists to balloon to 20 percent by the end of the year. More uninsured drivers on the road will mean higher insurance expenses, experts say. They explain that insurance providers have to raise premiums to prepare for a higher probability of policyholders getting in accidents with uninsured drivers.
Industry sources also recommend car owners to purchase additional coverage options. Most state require drivers to have the minimum amount for bodily injury liability as well as property damage liability. Typically, these amounts are around $15,000 for injury or death of one person, or $30,000 for all victims involved in a single accident. The minimum for property damage liability, on the other hand, is usually $5,000.
Insurance experts say that the minimums are simply not enough to cover all parties involved in an accident. Because of this, most drivers often choose to file lawsuits against the other parties and their insurance providers. However, they add that costly lawsuits can be avoided by simply availing of added options. They explain that the options can help policyholders settle claims out of court and prevent a costly legal battle.
According to analysts, policyholders have to shoulder additional costs that exceed the minimum amounts required. With rising medical costs, car owners can end up paying hundreds of thousands of dollars from their own pockets in hospital expenses, especially if they are held at fault for an accident.
Policyholders can also face substantial expenses for auto repairs especially if they cause an accident. Having an expanded liability coverage can help reduce the amount or even let car owners off the hook when it comes to paying for expensive repairs.
Getting additional coverage for uninsured and underinsured drivers is also a must, experts contend. With this particular option, a policyholder’s potential medical expenses will be covered even if the other driver or party’s insurance cannot cover him or her. Car owners should also consider comprehensive and collision coverage to better protect them in the event of an accident, specialists say.