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Economy leads some to drive without auto insurance

A growing number of consumers are not buying car insurance despite state laws requiring it

This time of year a number of families are getting ready to celebrate with young adults graduating from high school and college. Parents are working out plans to send sons and daughters off to college while university seniors are looking for their first job and apartment.

Despite the many reasons families have to celebrate in late spring and early summer, the economic downturn that has now hit Americans for over a year is wreaking havoc on the lives of many trying to make financial ends meet.

Many of those young graduates are likely worrying about how to finance their college education or how to pay back student loans with jobs harder to come by. And parents trying to hold on to homes facing foreclosure or make monthly bill payments are increasingly turning to credit cards to finance daily expenses.

Given this still-gloomy economic picture, a number of Americans are disregarding state laws and foregoing purchasing and maintaining auto insurance as another way to save money, potentially at the expense of their own safety and well-being.

Earlier this year, the Insurance Research Council reported that nearly one in six drivers in the U.S. are expected to be operating a car uninsured by next year. The group cites the economic downturn as a reason why the uninsured motorist rate is expected to spike after showing declines just a short time ago.

“An increase in the number of uninsured motorists is an unfortunate consequence of the economic downturn and illustrates how virtually everyone is affected by recent economic developments,” said Elizabeth A. Sprinkel, senior vice president of the IRC.

“Responsible drivers who purchase insurance end up paying for injuries caused by uninsured drivers,” she added.

However, drivers are behaving differently based on their state of residence, noted the IRC. There were more uninsured motorists in New Mexico, Mississippi and Alabama and fewer uninsured drivers in Massachusetts, Maine and North Dakota.

The IRC did find a correlation between the number of uninsured drivers and the unemployment rate. Research shows that as the unemployment rate ticks up by one percent, the uninsured motorist rate climbs over three-quarters of a percentage point.

The group expects the number of uninsured drivers to reach 16.1 percent by 2010.

One state particularly hard-hit by the economic downturn and subsequent troubles affiliated with the auto industry is Michigan.

A report from the Lansing, Michigan NBC station says that despite punishment including fines and jail time associated with driving uninsured, many people are getting behind the wheel without protection. Those same people may also be without health insurance and a resulting accident could end up costing thousands of dollars, says the news source.

Despite tough economic times, the internet provides an easy, inexpensive way for consumers to search for cheap auto insurance and discounts are available.

Multi-policy discounts are an easy ways to save money on an auto insurance plan if a driver also has a renters insurance or homeowner insurance plan with the same company, for example.

Affiliation with a particular college or university is another way to cut the cost of the insurance quote.

Although consumers are worried about job security, and paying bills on time is becoming increasingly difficult, timely payments of credit card balances and other personal debt is important to maintaining a good credit score.

A solid credit history is another factor considered when determining auto insurance rates.

Learn how easy and convenient shopping for auto insurance can be. Get your free auto insurance quotes today!

Posted: May 11, 2009

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