Drivers in the Green Mountain State are increasingly concerned with the rising cost of car insurance rates. Even if you don't think that your Vermont car insurance rates have been impacted by the state of the economy, they have. You might be surprised to know just how that is happening.
Experts say that insurance coverage always suffers in a struggling economy. This is because rising gas prices, the credit crunch and the housing crisis put such a pinch on consumer's wallets that they look to their car insurance to cut costs. Some people will cancel their policies while others look to cancel specific and non-required coverage options like uninsured motorists coverage or collision.
In Vermont, you must show the ability to cover liability in an auto accident in the amount of 25/50/10. This means that you must have policy coverage of $25,000 for individual bodily harm, $50,000 per accident bodily harm, and $10,000 in property damage liability. (If you don't want to take out a Vermont car insurance policy you must prove to the state that you have self insurance in the amount of $115,000.) There is no requirement for uninsured or underinsured motorist coverage.
The problem comes when a driver, who has cancelled his insurance, hits your car. If you don't have the uninsured motorist protection, then you are basically on your own in paying for the damages. Statistics say that 1 out of every 7 drivers is uninsured. The financial fallout can be devastating.
Auto Insurance Fraud
Another way that the poor economy might be affecting your Vermont car insurance premiums is due to instances of fraud. According to the Coalition Against Insurance Fraud, the average family pays an additional $950 every year in insurance premiums due to the fraudulent acts of some people. In fact, estimates are that fraud costs the country between $4 and $6 billion dollars a year.
There are two types of insurance fraud: soft fraud and hard fraud. Soft fraud occurs when an insured person decides to take advantage of a situation by telling a "white lie" or exaggerating a situation. For instance, when someone inflates the amount of damage done to their vehicle in order to get a higher payout from his or her insurer then this is soft fraud. Hard fraud is when someone purposely plans an accident to make a claim, or creates a situation in order to take advantage of their or someone else's insurance funds.Unfortunately, instances of insurance fraud are on the rise,
and are likely to keep raising your premiums. The best way to keep your Vermont car insurance rates at manageable levels is to review your policy at least once a year and actively shop around for competitive rates. You'll also want to report any instance of fraud that you see, and make sure that you keep appropriate coverage on your vehicle, without any lapses.