Why Are More U.s. Drivers Going Without Auto Insurance?

The number of uninsured drivers has increased over the last few years, with analysts predicting that the United States is currently setting a record for the percentage of motorists foregoing coverage.

During our previous article exploring the ramifications of this month’s hurricanes, we learned that the percentage of uninsured motorists had gone up. This sent your author down a rabbit hole to learn more about the topic while also encouraging a few readers to request we dive a little more deeply into the topic. We'll be looking at what could be causing more people to balk insurance, differences between states, and where the numbers appear to be heading.

The national average of uninsured drivers in the United States has increased from 11 percent in 2019 to over 14 percent in 2022. While it’s difficult to find firm numbers of successive years, analysts seem to be in agreement that the figure will only increase. J.D. Power claimed that the trend had continued through the first half of 2024 — indicating that the number of uninsured drivers has presumably gone up.

“We’ve gone now [two-and-a-half] years of pretty historic increases in auto insurance premiums,” said Stephen Crewdson, senior director of insurance business intelligence at J.D. Power. “Some households are really struggling to make that payment.”

Full coverage presently ballparks just above $2,500 per year. That’s already 26 percent higher than what we saw in 2023 and significantly more than what would have been considered normal prior to 2020. Insurers are citing rising instances of serious accidents, automotive theft, and also the fact that there are fewer drivers buying coverage as the main reasons rates have gone up. Due to the complexity of modern vehicles, more than 20 percent of vehicles are now considered total write offs after a crash. This puts added strain on insurance agencies when it comes time to pay out.

None of the above is something the average consumer is likely to care about, however. In fact, J.D. Power painted a pretty grim picture of how the typical driver feels about insurance firms. In a 2024 study, it was revealed that 51 percent of customers responded that they had "low-trust" in their chosen insurance company, while 15 percent were said to have have high levels of trust and 34 percent had mid levels of trust.

Mark Friedlander, spokesman for the Insurance Information Institute, a nonprofit affiliated with the Insurance Research Council, told USA Today that insured motorists paid about $16 billion in coverage for uninsured or underinsured motorists in 2020. The outlet added that that was the most recent data point available, adding that the number was assumed to increase through 2024. Friendlander then noted that not being adequately insured was a significant transgression — which makes sense considering he represents the insurance industry.

“It’s a very serious offense,” Friedlander said. “It’s not a parking ticket, let’s put it that way."

But it feels like we're moving past the point of threats. While insurers bemoan the fact that people are abandoning coverage, Americans are annoyed that the rates (which they’re legally obligated to pay in most cases) continue to climb. It’s not uncommon to see younger drivers question the premise of insurance on web forums, with some going so far to call the entire concept a scam.

If you’re wondering why fewer people are bothering to purchase auto insurance in the 2020s, there’s no singular reason. Considering how much the issue varies between states, it makes sense that the reasoning behind it would as well. However, there are a few items we can point to that assuredly had an impact on a national level.

Money is arguably the biggest factor. We’ve already noted that premiums are up with car insurance costs having risen by 52 percent in just the last three years. But the cost of living has jumped dramatically within the same time frame. Homelessness has likewise spiked since 2020, with federal officials reporting a 12 percent increase in 2023 alone. Households stuck choosing between sleeping outdoors and having enough food or paying their insurance provider will invariably choose the former.

Increasing migrant populations are also assumed to have contributed. Despite the federal government often helping to bring in immigrants into the country with help from NGOs, most are still considered illegal. Taking the steps to get properly licensed and insured often means exposing themselves to potential criminal charges and even deportation. While there are states (e.g. Rhode Island) and agencies that are trying to find ways of getting non-citizens licensed without repercussions, others will use those interactions to involve Immigration and Customs Enforcement (ICE).

The Insurance Research Council has said there are correlations to the pandemic, noting that plenty of drivers dropped their coverage in 2020 because they no longer found themselves able to go anywhere.

“At the start of the pandemic, both [underinsured motorist] and [bodily injury] frequencies dropped as the shutdowns dramatically curtailed driving,” expressed Dale Porfilio, Fellow of the Casualty Actuarial Society (FCAS), Member of the American Academy of Actuaries (MAAA), and president of the IRC. “However, [underinsured motorist] frequency dropped less than [bodily injury]. By 2022, [underinsured] claim frequency had returned to its 2019 level while [bodily injury] claim frequency was still below pre-pandemic levels.”

The way in which uninsured drivers are reported matters, too. Some states include drivers lacking sufficient coverage as “uninsured” and have passed laws to help identify (and punish) those found lacking. Others don’t seem very concerned with the issue and haven’t bothered to throw a lot of resources behind tracking or enforcement. As previously mentioned, insurance requirements also vary quite a bit between locales.

Based on data from the Insurance Research Council, Washington, D.C., has the highest average of uninsured drivers at 25.5 percent. At 24.9 percent, New Mexico is the next highest — followed by Mississippi (22.2 percent), Tennessee (20.9), Michigan (19.9), Kentucky (18.7), Georgia (18.1), Delaware (18.1), Colorado (17.5), and Ohio (17.1).

States with the lowest ratios of drivers lacking coverage included Wyoming (5.9 percent), Maine (6.2), Idaho (6.2), Utah (7.3), New Hampshire (7.8), Nebraska (7.8), North Dakota (7.9), Kansas (8.0), South Dakota (8.0), and Minnesota (8.7).

But the above numbers are from 2022 and are universally assumed to have increased a few percentage points by now. Some projections have the national average of insured drivers situated as high as 18 percent, whereas others estimate it to be closer to 16 percent.

While automotive insurance has technically existed since 1897, when the very first policy was written by The Travelers Companies in Massachusetts, it would be many more decades before it became mandatory. The New York legislature passed their compulsory insurance law in 1956. But it wouldn’t become a requirement across the U.S. until the 1980s. By then, all states either had formal laws on the books or made uninsured drivers liable for any damages caused in the event of an accident. Rules between states vary immensely. But, with the exception of New Hampshire, all states presently require some form of payment to insurance companies or the state itself in order to legally drive a vehicle.

One wonders what the near-term future holds. With younger generations not earning the kind of money their parents did at the same stages in life, and the cost of living getting progressively more expensive for everyone, many seem to be questioning the value proposition of just about everything these days. Insurance, which often feels like throwing money into black hole until it’s time to make a claim, may not be at the top of a lot of people’s list when it comes to prioritizing ever-tightening budgets. Meanwhile, all the factors attributed to the rising number of uninsured drivers living in the U.S. have been increasing.

[Images: Monkey Business Images/Shutterstock; PanuShot/Shutterstock]

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