Legal and Financial Risks for Uninsured Drivers
If an accident occurs and one of the drivers is uninsured, a myriad of negative consequences immediately follow. Possible solutions to problems arising from such an accident are dependent on many factors ranging from driver status to type of vehicle coverage. However, there may be reasons for a driver not to have auto insurance, including:
- Affordability – The premium rates on auto insurance policies are quite high in states requiring full vehicle coverage, and are based on driver age, make and model of the car and driver motor vehicle history. Some drivers who live in states that only require limited liability insurance are more likely to get coverage on their vehicles due to reduced rates. Drivers unable to afford monthly insurance premiums should either change carriers or get an older model car.
- Inoperability – Although auto insurance is mandatory, an inoperable vehicle usually is not insured. Proof of vehicle damage by a licensed auto repair professional needs to be filed with the insurance carrier and the state department of motor vehicles to cancel any existing coverage.
- Policy/Coverage Changes – In some very rare cases, insurance companies may change policy terms and coverage details when the company is part of a merger or buyout. Most policyholders are notified prior to the end of coverage period in order to explore other options.
Types of Auto Insurance Coverage
Most drivers know that it is illegal to not have auto insurance but are unaware of the types of coverage included in a typical full-coverage insurance policy.
- Bodily Injury Liability – Payment for accident-related injuries the driver causes to other drivers and passengers
- Property Damage Liability – Repair payments for accident-related damages to others’ vehicles, building, or other property caused by the driver
- Collision – Reimbursement for damages to the vehicle regardless of who was at fault
- Personal Injury Protection – Payment for injuries to the driver and passengers of the driver’s vehicle
- Comprehensive – Payment for non-accident related damage to the vehicles, such as vandalism and natural disaster
- Uninsured/Underinsured Motorist Coverage – Specially designed to cover the costs of injuries or damages from an accident incurred by an uninsured driver, a hit-and-run driver, or a driver who does not have enough insurance to pay for expenses
The Consequences of Driving Uninsured
There is a 1 in 7 chance that an uninsured motorist is going to be involved in an accident.
Each state imposes a different penalty for driving uninsured, but most of them do require drivers to carry proof of insurance at all times. Uninsured drivers can be fined up to $5000, have their licenses suspended or revoked, or be incarcerated.
Drivers first need to understand that auto insurance is intended for the vehicle, regardless of the driver’s status. In other words, if Person X is a friend of Person Y and wants to use his vehicle to run an errand, any accidents that occur while Person X is driving will be covered under Person Y’s full-coverage insurance policy (based on coverage provisions). Person X could be penalized legally if he was at fault, but the financial responsibility lies with Person Y’s insurance company because of vehicle ownership. Person Y could then sue Person X to recoup the losses, so consulting with a law firm who specializes in car accidents and claims would be the best idea.
If an uninsured driver causes an accident with an insured driver, suing for compensation through legal counsel would be the only way to recover losses. If an uninsured driver is the victim of an accident with an insured driver, the insured driver’s insurance company is responsible for damages. Simply put, the fault of the driver determines who is liable for damages and injuries. Penalties for accidents vary from state to state, so enlisting the services of an insurance specialist in addition to legal counsel is advisable.
Sometimes a payment plan is negotiated for damages caused by uninsured motorists. In the event that payments are missed without an acceptable reason (e.g. medical emergency, income loss), the uninsured driver’s assets may be seized in addition to being classified as a high-risk for insurance companies. The bottom line is that carrying auto insurance is not an option, but a necessity, to save time and money in the long run.