When hard times hit, consumers often go into survival mode. For many, that means making tough decisions and possibly eliminating what at any other time would be considered essentials.
One example: car insurance.
According to the Insurance Research Council, the number of uninsured drivers rises most dramatically during economic difficulty. While Georgia’s percentage of uninsured drivers held relatively steady from 2005 at 11.9 percent to 2007 when it was 11.6 percent, that number has likely rocketed since. The results of national research show that for every 1 percent rise in unemployment, uninsured drivers rise by0.75 percent.
If that trend holds true in Georgia, where according to the Georgia Department of Labor unemployment from November 2007 to June 2010 has spiraled from 4.2 percent to 10 percent, then 15.95 percent of people on the rode are driving around with no coverage. The IRC anticipates the national average for uninsured will be 16.1 percent when its next report is released.
“There’s no doubt we’ve seen big spikes whenever there is a recession,” said Patrick Schmid, IRC director of research. “People decide in a lot of cases to either cut back or not pay. It’s not only harmful to the uninsured, but to other drivers as well.”
In fact, almost one million people were injured in Georgia in car crashes from 2000 through 2006, according to the latest Georgia Department of Transportation data. Over the seven year period, crashes resulted in 2,500 injuries on average each week.
“State law says you have to have it and if you don’t, you’re putting yourself at risk,” said David Colmans from Georgia Insurance Information Service.
Before canceling an insurance policy, drivers should consider taking steps to lower the bill:
– Increase your deductible to drive down the cost of the policy. An increase of $1,000 and you could decrease your cost by as much as 40 percent.
– Many insurance plans come with towing options. Eliminating that from your policy will make a small difference.
– If you have an older car, you may be able to drop collision or comprehensive coverage.
– If you already have suitable medical insurance, you can save by only carrying on your vehicle policy the minimum required in the state.
– Drive less. Carpooling and using public transportation will decrease the number of miles you drive. If it decreases significantly enough, let your insurance company know because your rate is based in part on how much you drive.