Feb. 14--The number of uninsured drivers may be on the rise as the recession worsens in California. With unemployment climbing above 9 percent, the uninsured motorist rate could increase above 18 percent in the Golden State, a study released last week revealed.
As residents struggle with reduced incomes because of job loss, salary cuts or lost work hours, the hard-edged economic realities of life may prompt some to consider letting their insurance premiums lapse, but continue driving unlawfully anyway.
The Insurance Research Council estimates that the economic downturn may push uninsured motorists statewide to an all-time high in 2010 of one in nearly five drivers. The study -- which didn''t address estimates county by county -- uses insurance claims data made by individuals whose cars were hit by uninsured drivers that resulted in injuries. A 1 percent increase in the unemployment rate, said IRC, corresponds with three-quarters of a percentage point increase in the uninsured motorist rate.
As the California economy continues to tumble, "We''re worried the figure could go as high as 25 percent, perhaps more in large, inner-city areas," said Pete Moraga, a spokesman for the Insurance Information Network of California. Not eager at the prospect of declining revenue from premium payers -- and possibly having to raise rates on other policyholders -- the for-profit companies are anxious to retain customers who have hit rough financial patches.
Mr. Moraga said options exist where the unemployed and low-income earners can find affordable ways to cut auto insurance premiums when wallets get thinner. On the subject of how widespread the problem is in California, Mr. Moraga said most law enforcement agencies aren''t crunching year-over-year numbers related to the number of cited drivers who are deemed uninsured.
However, the Santa Barbara Police Department issued nearly 100 more "insurance-related violations" in 2008 compared with the previous year. In 2007, SBPD issued 641 citations due to no proof of insurance; in 2008, the number was 728 citations. The city doesn''t track the final outcome, so it''s hard to guess how many drivers were essentially uninsured from the beginning.
"Most of the violations are written for failure to show current proof and some of these may be later dismissed or reduced when people can show the courts they have current proof of insurance," said Sgt. Lorenzo Duarte, a spokesman for the police department.
When stopped by the police, having the documents you''re supposed to keep in your car will save a lot of time and money in the long run, Sgt. Duarte added.
California law mandates that insurers notify the Department of Motor Vehicles when licensed drivers cancel their policies. In 2007, DMV issued 2.1 million notices of suspension for this reason; in 2008, the number was 1.8 million notices. Tracking for compliance includes vehicles being put in a person''s name for the first time (new, used and non-resident) and cancellation of insurance policies, according to Armando Botello, a spokesman for the DMV. Vehicles continue to be tracked if the state doesn''t have proof of insurance. If DMV has proof of insurance from the beginning, then vehicles are not tracked, unless somewhere along the line that policy is cancelled.
Mr. Botello said DMV hasn''t tracked the data to determine whether the decrease between 2007 and 2008 was because of a reduction in car sales, the result of insurance companies doing a better job of getting information to the state early in the process, or both. A firm determination on the reason for the difference in numbers would require an in-depth analysis, which the state cannot afford at this time, said Mr. Botello.
To protect themselves and other drivers, Mr. Moraga advises motorists to ask current insurers about available discounts; consider increasing deductibles; and look at dropping comprehensive and collision coverage on older vehicles. California also has a low-cost auto insurance program.
Providing limited coverage at a reduced premium, this program helps those earning less than 250 percent of the poverty level, yet still provides some protection. The Web site calculator showed a liability policy in Santa Barbara County at a cost of $220 per year.
"A minimal policy allows you to drive legally in California," said Mr. Moraga, adding that if a driver can''t afford the insurance even on these terms, they can''t afford the vehicle, either.
"Park the car, take the bus or walk," he advised.
More information about the low-cost, state-sponsored program can be obtained at www.iinc.org.
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