One in Three US Drivers Are Either Uninsured or Underinsured, Exposing Themselves and Other Drivers to Significant Financial Risk, New IRC Study Shows

MALVERN, Pa.--(BUSINESS WIRE)--One in three U.S. drivers (33.4%) were either uninsured or underinsured in 2023, a 10-percentage point increase in the combined rate since 2017, according to a new report, Uninsured and Underinsured Motorists: 2017–2023, produced by the Insurance Research Council (IRC), affiliated with The Institutes.

Forty-nine states and the District of Columbia legally require drivers to purchase liability insurance coverage. In New Hampshire, the only state without compulsory insurance laws, drivers are required to demonstrate proof of financial responsibility. Despite this near-universal requirement, a significant number of individuals choose to drive without liability insurance.

Auto insurers offer two types of coverage to protect policyholders when at-fault drivers have insufficient coverage. Uninsured motorists (UM) coverage compensates accident victims for injuries or damage caused by a driver without liability insurance or from a hit-and-run driver. Underinsured motorists (UIM) coverage compensates the injured party for costs associated with injuries or property damage that exceed the at-fault driver’s coverage.

“With the abrupt changes in the economy and impacts on household income, UM rates rose in nearly every state from 2019 to 2020,” said Dale Porfilio, FCAS, MAAA, president of IRC. “We have been watching for UM rates to improve with lower unemployment and household income increases, but the IRC’s latest research shows UM rates continue to tick upward in most states. We presume deteriorating insurance affordability is more than offsetting economic improvements.”

Porfilio, who is also chief insurance officer at the Insurance Information Institute (Triple-I), noted that the rise in UIM rates since 2020 has been more dramatic than the gradual rise in UM rates.

“The increase in UIM rates points to higher UIM premiums in the future, worsening affordability and potentially increasing the likelihood of more uninsured drivers. This demonstrates the complex interconnectedness of these two coverages as insurers protect consumers from insufficient coverage by at-fault drivers,” Porfilio added.

Key findings of IRC’s study:

• In 2023, more than one in seven drivers countrywide (15.4%) were uninsured, an increase of 3% over the six years of this study.
• The UM rate varied substantially among individual states. Mississippi had the highest UM rates in 2023 at 28.2%, followed by New Mexico at 24.1% and the District of Columbia at 23.1%. States with the lowest UM rates in 2023 included Maine at 5.7%, Utah at 6.2% and Idaho at 6.4%.
• Nearly every state saw a rise in the UM rate in 2020 with the onset of the pandemic; the experience from 2020 to 2023 has been more mixed. Michigan experienced the largest decline in the UM rate over this later period, while Washington experienced the largest increase in uninsured drivers.
• Nearly every state experienced a rise in UIM rate between 2017 and 2023, with the only exceptions being New York and the District of Columbia.
• Several factors are associated with variations in UM and UIM rates across states, including economic, insurance costs, and state insurance laws and regulations.

About Insurance Research Council

The Insurance Research Council (IRC), affiliated with The Institutes, is an independent, nonprofit research organization supported by leading property and casualty insurance companies and associations. IRC provides timely and reliable research to all parties involved in public policy issues affecting insurance companies and their customers. IRC does not lobby or advocate legislative positions.

About The Institutes

The Institutes are a not-for-profit comprised of diverse affiliates that educate, elevate, and connect people in the essential disciplines of risk management and insurance. Through products and services offered by The Institutes nearly 20 affiliated business units, people and organizations are empowered to help those in need with a focus on understanding, predicting, and preventing losses to create a more resilient world.