Report Claims More Americans Would Rather Risk Driving without Auto Insurance Than Go Broke

When maintaining financial stability, it is common for most people to make sacrifices to stick to a budget. However, according to a report by J.D. Power, there has been a staggering increase in car owners without auto insurance.

It sounds terribly ironic, considering the purpose of auto insurance is to protect and alleviate the financial stresses off of the shoulders of drivers. But since many premiums have gone up, many drivers believe that the risk of driving without auto insurance is easier on their monthly budget.

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Premiums have seen an increase in cost in the last two years. In 2022, they had risen 7.9%, and in 2023 they had risen another 5.9%. These annual price hikes have caused many Americans to be either unwilling or unable to pay for an auto insurance policy.

According to the study, American households with at least one vehicle that does not have auto insurance have gone up 5.7% in the first six months of 2023. In the last six months of 2022, that figure was at 5.3%. In addition, there has also been an increase in customers shopping for auto insurance, which is currently at 12.5% following the second quarter of 2023.

Where Are Americans Driving Without Auto Insurance?

A part of this phenomenon is also based on geography, as some regions of the U.S. indicate higher rates of car owners dropping auto insurance than others. As seen in the table below, states like South Dakota and New Hampshire have seen an increase in rates greater than 80% of uninsured drivers.

State1H 20232H 2022Change in Uninsured Drivers
South Dakota6.8%3.3%106%
New Hampshire7.9%4.3%84%
West Virginia6.0%4.0%50%

What Is Causing People To Drive Uninsured?

With inflation and rising loss ratios, unhappy customers exiting out of their insurance policies was an unavoidable issue facing many auto insurance companies. Many found that the current premiums were not enough to pay for these rising claims costs, with companies spending 12% more on claims than all the money that they collected in premiums in 2022. This was the second year in a row that these companies have had to run at a deficit.

In addition, customers with clean driving records who have not had any accidents will view these increased costs as unfair rate hikes. By the nature of “cause and effect”, this too will be cause enough for many good drivers to exit out of their policies and start shopping around for a more affordable one.

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