Uninsured on the road could swell

The economic slump is removing more than luxury items from household budgets. A recent survey predicts more people in New Hampshire will let their auto insurance lapse in the wake of the downturn.

The Insurance Research Council study based the prediction on national data that shows the percentage of uninsured motorists tends to increase right along with the unemployment rate.

New Hampshire, one of the few states that does not require drivers to carry insurance, saw its unemployment climb to 4.6 percent in December, up from just 3.4 percent in December 2007.

“It makes sense that people might cut out insurance if they find they might have been able to afford it before but can’t now, especially since it’s not mandatory,” said David Withers, a property casualty actuary with the New Hampshire Department of Insurance. “And there’s definitely data that shows the drop in covered motorists coincides with unemployment.”

“What that means is, if more people choose to let their policies lapse or to go without insurance, the chances are greater that if you do get in an accident it will be with someone who is uninsured. And if that happens, hopefully you are insured because it could mean a lot of out-of-pocket costs,” he said.The study did not make specific predictions about how high New Hampshire’s rate of uninsured motorists could jump from the 11 percent recorded in 2007, but it predicts the national rate could climb from 13.8 percent in 2007 to 16.1 percent by 2010.

That prediction is based on current unemployment projections. The national unemployment rate was 7.2 percent in December and is expected to keep climbing.

But, Withers offered some hope for those who may want auto insurance, but think they can’t afford it.

“The personal auto insurance industry has become very competitive over the past several years,” he said. “Up until about 2008, we’ve steadily seen rate decreases . . . And New Hampshire is one of the more affordable states in terms of auto insurance in the country.”

He also added that, legally, an insurance company can’t deny coverage unless the person is not a resident of the state or isn’t legally allowed to drive. Which means, he said, even if a person’s income is low or their credit is bad, in this state, the person must still be allowed coverage.

Brett Ludwig, a spokesman for Allstate Insurance, said that the company never takes income into account when issuing auto insurance, but that credit is a factor.

“It’s one of many factors that we look at,” Ludwig said. “We use it to determine risk . . . So typically the worse a person’s credit is, the more likely they are to get into an accident. But we also take into account what kind of car is being insured, where it’s garaged and a whole host of things like that.”

Ludwig said Allstate is also trying to help those who may be considering letting their policies lapse or forgoing a policy all together. The company is offering varying degrees of coverage for those who need to be budget conscious, he said.

“We offer a basic coverage plan for people who need to watch their budgets,” he said. “That is something new for us and not something all insurance agencies offer.”

Allstate is also trying to warn people about the risks involved with not having insurance – mainly, more out-of-pocket costs for vehicle damage and bodily injuries incurred by an accident

“One thing we are trying to do is get the word out that there may be more uninsured motorists on the road and the risks that presents,” he said. “It may not be the best way to protect their overall net worth. . . . The risks can be very great.”