These are weird times. Americans have had to get used to a whole lot of changes very suddenly, and the effect of those changes is like the Rube Goldberg machine with one new surprise after another, day after day. We know that the situations we’re facing have forced dramatic ups and downs in the stock market, jobs, and the economy in general, but it’s also had a surprising effect on car insurance.
Domino Effect
The workings of the economy and American society have a long-tail domino effect that makes it difficult to precise exactly what is going to happen at any given moment. Certain effects may be obvious, others not so much. For instance, in Oakdale, Minnesota, we generally have a nice comfortable 11.5% uninsured motorist rate, according to the Insurance Information Institute. This puts us at the better end of the national average, which ranges from about 10% to 15%.
But we’re expecting a massive spike in the coming months. Right now, we’re all feeling the financial crunch, but we’re also driving less, so you can expect that it sort of evens out. Plenty of people have canceled their insurance by now, but just as many people have likely quit driving for the time being, or drive only seldomly.
The spike is actually going to come as a result of efforts that insurance companies have undertaken to ease the financial burden through deferred payments. In short: Many people who could typically afford to make their payments monthly are unlikely to be able to pay several months of deferred premiums all at once.
Managing the Situation
The smart move for many drivers is to reduce coverage to the minimum. This will at least allow you to drive legally and generally cover any liability damages that may occur. But many drivers are not preparing for that big bill that’s coming when the deferred payments are due, and they’ll have to cancel their insurance. Some may also stop driving until they can get their situation taken care of, but many won’t.
Insurance is all about being prepared. You can’t be prepared for everything, of course, but you can for the most likely threats and hazards. This is why just about every home insurance policy covers fire, but not a lot of homeowners are paying extra for meteor damage or alien invasions.
In the past, we’ve generally been able to assume, in Minnesota, that if you are in an auto accident, there’s a roughly nine in ten chance that the other party is going to be carrying insurance. That won’t be the case for very much longer.
We’re all doing a lot of reassessing in light of recent events, and auto insurance is just one of those things that need reassessing. We’re about to see a significant spike in uninsured and underinsured drivers, so you want to make sure that you are adequately protected because this is a hazard that’s going to become more common in the coming weeks.
If you have any questions or you’d like to talk about getting covered, get in touch with us at Andreotti through our website or by phone.
