Most states require all motorists to acquire insurance to protect both themselves and other motorists. The two purposes for auto insurance include insuring your liability to others and insuring against harm others inflict on you or your car. This is known as collision coverage. State law requires you to purchase liability insurance but the amount you require should depends on the value of your automobile.

The three basic types of insurance coverage available are liability, collision and comprehensive. Collision insurance provides coverage for damages to the vehicle itself along with bodily injuries sustained in an accident. Accident reports give the insurance company all the necessary details of the accident.

The difficulties arise when one of the drivers does not have auto coverage. When this occurs, the cost of medical bills, property damage and rehabilitation have to come from somewhere. The insured drivers’ insurance company or an uninsured motorists’ state fund generally pays in these times uninsured motorists.

Auto insurance premiums will therefore be higher if this rider is in place to help absorb the cost of an accident with an uninsured motorist. While the act of operating a motor vehicle without insurance is a very irresponsible one, the costs still have to be provided for. This puts the burden on the responsible motorist that has insurance in place by adding to their monthly premiums.

With many people on the road, operating a motor vehicle without insurance, the providers must have a way to recover their losses when an accident occurs. The increased premiums allow them to do just that. Uninsured and underinsured drivers make up a small portion of people on the road today.

According to the Independent Research Council (IRC) in January 2009, approximately one driver in six operates a motor vehicle without insurance. In addition to that, the number of uninsured motorists decreased on a national scale from about 14.9% in 2003 to 13.8% in 2007. During the same time frame, the auto insurance premiums have increased about 1.5% due to safer cars, a decrease in accidents, and fraud fighting efforts, according to the Insurance Information Institute.

Having a rider for uninsured motorist on your policy is generally a good idea even if the state does not require it. This can alleviate any issues should an accident occur involving you and one of them. The premium will not be much more than a policy without it, and the peace of mind that comes with it is invaluable.

With the advent of the Internet bringing more and more providers to the general public, the competition between auto insurance companies has escalated greatly. Their rates must be kept competitive in order to not only garner more business, but still be able to cover their costs. With the inability to raise rates just to increase profits, the consumer is the one who benefits in the end with this type of competition.

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