CFA Report Sympathetic for Some Uninsured Drivers

March 16, 2014 Updated: March 16, 2014

WASHINGTON—Uninsured drivers are commonly held in low esteem. The public overwhelmingly supports mandatory minimum liability coverage auto insurance, which is required in all states, with the exception of New Hampshire.

A new report from the Consumer Federation of America (CFA), “Uninsured Drivers: A Social Dilemma in Need of a Solution,” tries to deflect the anger against uninsured drivers and portrays them in a more sympathetic light. The report was released March 10, accompanied by a press release and a teleconference.

The research found, not surprisingly, that the uninsured are more likely to be low-income drivers. They are faced with the annual liability costs that at a minimum are more than $500 for good drivers, and for some drivers in certain locations, the cost can exceed $1,000. These uninsured low-income drivers cannot afford the annual premiums, yet typically the low-income uninsured driver needs a car to get to work.

“Most uninsured drivers are responsible citizens. They just can’t afford auto insurance premiums that represent their largest driving expense,” said CFA Executive Director Stephen Brobeck in the CFA press release.

The CFA report argues that there is a basic unfairness about this situation. Most of those low-income drivers work—or are looking for work—and so most need a vehicle. The report cites a Brookings Institution study, which found that even households in metropolitan areas, where accessible public transit is most developed, could reach only 40 percent of the metro-wide jobs within 90 minutes.

“Many lower income drivers risk fines and jail time for driving, without insurance, to work,” states the report.

The mandatory liability laws cannot be lifted because of the strong public sentiment for them held by nearly all, including the low-income drivers. The CFA commissioned a national opinion survey last September of 1,000 adult Americans. Almost 9 out of 10 (87 percent) agreed with the requirement that all drivers have liability insurance. Only 10 percent disagreed.

However, if Americans knew the terrible dilemma faced by lower-income Americans who need to drive to get to work, but cannot afford expensive liability coverage, they might “temper” the “aggressive enforcement of mandatory insurance laws” and harsh penalties, especially for those who drive safely, according to the report.

Number of Uninsured

There are no exact counts or samples to determine reliable statistical estimates of the uninsured by state and the percentage of these drivers who have low incomes. Several indirect ways to get at these numbers are available, and these estimates generally agree.

The most cited source for the proportion of the uninsured is the estimate compiled from the Insurance Research Council, which computes the frequency of claims paid under uninsured motorist insurance, and claims under liability insurance. The relative size of these two numbers by state can provide an idea of a state’s proportion of uninsured. The proportion of uninsured ranged from 4.5 percent in Massachusetts to 28 percent in Mississippi, based on the most recent data available in 2011. The national average of insured drivers was 14 percent.

More Low-Income Uninsured

The report states that no one seriously disputes that lower-income drivers are much more likely to be uninsured than higher-income drivers. There are many studies to support this conclusion.

Brobeck said at the teleconference that one-fourth to one-third of low-income drivers are uninsured, by the best estimates available. The rate tends to be higher for city dwellers.

The large majority of the uninsured are from households with incomes below $36,000, according to the report. “Despite the efforts by state legislators and law enforcement officials to crack down on uninsured driving, the rate of uninsured drivers exceeds 40 percent in many communities,” stated the CFA.


State lawmakers are exasperating the problem by imposing higher liability requirements, which drives up premiums and forces more to drive without insurance. Alabama, Maryland, Texas, and Louisiana have in recent years increased mandatory liability limits.

The states are moving in the wrong direction: stricter enforcement and more punitive measures including large fines, vehicle impoundment, license suspension, loss of registration, and even imprisonment.

Thirty-three states can impose fines of $500 or more for the first offense. The maximum fine in West Virginia is $5,000. For Delaware, it’s $2,000. Thirty-two states allow for the suspension of driver’s license for a first offense.

“Fourteen states allow jail time for a first offense, and an additional six states allow jail sentences for a second offense,” states the report.

The first-time offender may receive a combination of the above penalties. Seven states allow jail time, license suspension, and fines of $500 or more for the first offense.

The CFA found almost no relationship between the harshness of these laws and the uninsured rate in the state.

The report states, “Some states are even spending money on data vendors who help identify uninsured motorists.” These efforts just make the problem worse for the uninsured drivers who cannot afford coverage.

Proposed Solutions 

The purpose of the report is to try to reverse the enforcement trends in many states and help find a solution to this problem. There is no perfect solution, the report concedes, but the problem can be mitigated in several ways.

The report makes the case that many of the uninsured are quite responsible drivers but have no alternative to get to work. It states that research has found that many uninsured “drive more cautiously and safely than the insured,” suggesting that they do so in part to avoid the police catching them.

The solutions proposed entail giving special dispensation to these “good” drivers while focusing law enforcement on the irresponsible drivers.

The report suggests as a first step to reduce “liability minimums for those lower income drivers with good driving records.” California has a program in which “low- and moderate-income residents with good driving records can purchase liability coverage for $350 or less,” states the press release.

The report suggests restricting insurance companies from using occupation, income, credit rating, marital status, and homeownership as rating factors. Because these non-driving factors correlate highly with income, their use is discriminatory against lower-income drivers.

There are some really unsafe drivers out there who have caused many accidents or have been ticketed often for speeding and other traffic violations. Because their premiums are high, they can’t or won’t pay for insurance. The report suggests that enforcement efforts would best be spent on targeting these uninsured drivers, not the majority of uninsured who try to drive safely and responsibly so they are not stopped by the police.