Survey: Nearly one-fifth of U.S. drivers have reduced or dropped auto insurance to save money

InsuranceQuotes.com staff

Nearly 20 percent of American drivers have reduced or canceled their auto insurance in the past 12 months to save a quick buck, according to results of an April 2011 survey released by the National Association of Insurance Commissioners. Such decisions can have “devastating financial consequences,” the association says.

The association warns that reducing or canceling auto insurance likely will result in higher premiums if a driver later reinstates coverage, as an insurer may view that driver as a higher risk. Furthermore, when coverage lapses, a driver can lose some discounts.

“Causing an accident without adequate insurance protection could have devastating financial consequences for you and your family. If an insurer will not be compensating accident victims, a court may order the sale of your house or other assets to pay for the victim’s damages,” the association says.

The survey also found that more than one-third of consumers didn’t realize their credit-based insurance score can be used to determine auto insurance premiums.

Most states allow insurers to use certain elements of credit history as one of several factors to predict the likelihood of losses from claims, according to the National Association of Insurance Commissioners. Having a poor credit-based insurance score can result in higher premiums or, in some cases, can force a driver to buy coverage from a higher-priced insurer.

Other survey findings:

• Nearly 40 percent of Americans surveyed are driving less or are taking public transportation more frequently. Since your auto insurance premium is based partly on annual mileage, driving less means paying less.

• Nearly 20 percent of car owners have traded in a vehicle for a lower-priced model or have gotten rid of a second vehicle entirely. Those moves, of course, can trim expenses for auto insurance.