Vegas Personal Injury Law Blog

The automobile insurance industry in the year 2009 has been negatively affected by our sour economy. The insurance industry warns that, by the end of this year, one out of six drivers will not be covered with automobile liability insurance. As a result of current rising unemployment rates, there has been a stunning rise in the number of drivers who are cutting back, or even dropping their automobile insurance coverage altogether, to save money. Therefore, we are looking at record numbers of uninsured motorist on our roadways across the nation.

Auto liability coverage is required in all states with the exceptions of New Hampshire and Wisconsin. In the past, the percentage of drivers without insurance coverage fell steadily until two years ago when the uninsured rate was 13.8%. But, starting in December of 2007, the uninsured rate spiked to 14.6%. The forecast is that the uninsured rate will be 16.1%, by the end of this year. This equates to 33 million licensed drivers across the country without any automobile insurance coverage, based on figures compiled by the Federal Highway Administration.

This phenomenon of increasing uninsured motorists is directly attributable to our challenging economy. An increase in unemployment of 1% results in an increase in uninsured motorists rate of more than three quarters of a percentage point. Many drivers who are unemployed cannot afford to maintain the minimum liability coverage required by state law. Food and rent become the primary financial concerns for these individuals. The average cost of an auto insurance policy was $72.25 per month ($867.00 annual premium) in 2007.

Uninsured motorists can face legal fees, fines, and penalties such as a suspension of their driver’s license. If they injure someone in a liability accident, they may be forced to file for bankruptcy. When economic pressures are high, uninsured motorists appear to be willing to accept these risks.

Obviously, it’s a bad idea to cut back on your auto insurance coverage during an economic recession. In fact, during economic recession, it is logical to increase your uninsured motorist and underinsurance coverages to protect yourself and others you care about. See my earlier post on UM/UIM Coverage.

The global financial crisis has negatively affected auto insurance companies. The reduced demand for auto insurance during the current financial crisis will result a very turbulent 2009 for the auto insurance industry. They may be required to raise their rates.

Grim economic times usually result in increased claims. People who would never think of filing an insurance claim, are more inclined to do so when they need money.

The current economic crisis has affected the demand for insurance. The reduced demand for auto insurance, results in diminished income to insurance companies. On the investment side, insurers have taken a massive hit. They are receiving much less income on their investments, because they are tied into th e stock market.

One way the insurance industry is reacting to the current recession is by denying more claims. They are also utilizing delay tactics on the settlement of auto accident claims. The more that they delay the more income they can earn in their reserves. They are settling claims for as little as they can. They must cut down the costs associated with litigating auto accident cases. You will see more auto insurance carriers utilizing in-house counsel rather than private counsel to handle auto accident cases to reduce their costs.

Considering all this, it is currently more difficult for your attorney to settle your personal injury accident case for fair and reasonable compensation. I have filed more lawsuits in the last two months on car accident personal injury claims than I ever have in the past. So, don’t blame your attorney, if your case doesn’t settle. Current economics may be directly affecting the settlement of your Personal injury claim.

Some information for this post came from an MSNBC report.