The Cost of not having car insurance

Alicia Nelson-Bell, Former Finance Intern 

​Why pay for something you may not use? It’s a pretty good question to ask yourself in most instances when it comes to money management. This is also a question that many people ask about insurance at some point in their life. In 2020 there were over 50,000 auto accidents reported to the Utah Department of Public Safety. For those who either feel they can’t afford auto insurance or those who choose not to have insurance so that they can save a little money on a monthly basis, they end up paying out pretty big when accidents happen or even when they get pulled over. So, is the small monthly savings worth the big bills that come when an accident happens? We’re going to go over some of the costs associated with not having auto insurance in Utah.

According to the Insurance Research Council, about 7% of Utah drivers are uninsured, which is lower than the national percentage of just over 13%. Each state in the United States sets their own limits and requirements when it comes to car insurance. In all but two states, Virginia and New Hampshire, car insurance is required by law to have, which is why not having insurance comes with such hefty consequences.  In Utah, not having car insurance is considered a misdemeanor. Drivers caught without car insurance will have their registration and drivers license suspended. If you are in an accident, registration and license suspension will usually be for one year and bring you fees for reinstatement. If you are caught not having insurance when pulled over for a violation not involving an accident, you will usually be able to have your license and registration reinstated as soon as you are able to provide proof of insurance. 
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Costs associated with not having car insurance in Utah:

• The first offense is a $400 fine
• Second and any further offenses are a $1,000 fine
• Court Security surcharge: $50
• License Reinstatement Fee: $30
• Registration Reinstatement Fee: $100
• Accident fee: $30 (if caught uninsured in an accident)
• Towing fee: $70-150
• Daily impound storage fee: around $40 per day
• Any property or medical costs if you are found at fault of an accident (average cost of non-fatal disabling injury is $61,600 and average cost of each property damaged is $7,500).

If you are found at fault of an accident without insurance, you may get lucky if the other driver has uninsured motorist insurance on their policy, but if they only have the minimum coverage and there are any serious injuries that cause hospitalization and/or loss of work, you may end up stuck with a pretty big bill for the rest of the costs. If you are caught driving without insurance, you will likely be tagged as a high-risk driver, which can make it more difficult and more expensive to get insured.
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Given that the average annual auto insurance premium is just shy of $1,200 or $100 a month for a comprehensive and collision policy, and the fees alone for getting caught driving without insurance can surpass this without an accident, the premium for being covered is a much smaller price to pay, especially if you end up at fault of an accident. When evaluating your monthly budget, the numbers and experts recommend making sure that you are properly insured so as to mitigate the risk that you are taking on yourself and sharing the risk with insurance companies. When looking for ways to decrease your insurance expenses, consider implementing the following:

Tips for Reducing your Auto Insurance Premium:

• Pay your premium in full on an annual basis rather than monthly- Use a revolving savings account to pay your insurance premium into as part of your monthly budget so you can pay it to the insurance company in full annually.
• Improve your Credit Score- Responsibility in one area of life is often seen to equate to responsibility in other areas of life. 
• Switch Insurance Companies- Consider shopping around annually to make sure the company you are with is giving you the best deal.
• Bundle insurances with One Company- Many companies offer discounts to drivers for bundling home/renter’s and auto insurance together or for having multiple vehicles insured with them.   
• Take a Defensive Driver course- Some insurance companies offer a discount for doing this. 
• Drive a Car that is Cheaper to Insure- Your insurance premium is affected by the type of car you are insuring since some vehicles cost more to repair than others, so this is something to keep in mind when you are shopping around for your next car. 

Resources:

• Utah Department of Motor Vehicles, Vehicle Insurance Requirements.
• Delbridge, Emily, The Balance. Penalties for Driving Without Car Insurance in Utah.
• Rivelli, Elizabeth, Bankrate. Average cost of car insurance in Utah for 2021 Bankrate.com.
• Marquand, Barbara, Nerdwallet. How to Save on Car Insurance: Smart Ways to Lower your Rate.