Arizona Minimum Insurance Levels Fail to Keep Pace With Economy
In the U.S., motor vehicle accidents are responsible for staggering economic losses.
Each year, over 40,000 people are killed, and more than 2 million are injured in crashes, resulting in over $340 billion in economic costs, according to data from the National Highway Traffic Safety Administration (NHTSA).
Yet, only 54% of these costs are covered by insurance companies. The remaining 46% falls on crash victims, healthcare providers, charities, and local governments, leaving taxpayers indirectly responsible.
The growing costs associated with motor vehicle accidents and the inadequacies of current state minimum insurance levels highlight a pressing issue: the need for reform in auto insurance regulations.
Here’s why it’s crucial for insurance companies and states to raise the minimum coverage levels.
The Cost of Motor Vehicle Accidents Has Gone Up Substantially
The current state minimum insurance levels have failed to keep pace with inflation, medical care, and vehicle repair costs. Car prices, medical expenses, and property damage costs have all skyrocketed.
Arizona has adjusted the levels more recently but the requirements still need to be revised to cover the actual costs of accidents, leaving individuals to shoulder significant out-of-pocket expenses. The state raised its minimum coverage levels in 2020 to:
- $25,000 for one person sustaining bodily injury or death in an accident,
- $50,000 for two or more persons sustaining bodily injury or death in an accident and
- $15,000 for damage to others’ property.
Pushback on Raising Minimums Highlights Misconceptions
One of the biggest concerns about raising minimum insurance levels is that it would lead to skyrocketing premiums, making insurance unaffordable for many. However, the data tells another story.
States that raised their minimum insurance levels saw smaller increases in premiums compared to the national average. When Illinois raised its minimum coverage levels, the annual premium increase was 4.1%, compared to the national average of 5.3%.
Increasing minimum coverage levels does not necessarily lead to higher premiums. In fact, higher minimums can help stabilize premium costs by ensuring that insurance companies cover more of the financial responsibility for accidents, rather than shifting these costs onto the public or policyholders.
Another common misconception is that higher minimum insurance levels will lead to an increase in the number of uninsured drivers, which the data also shows is false. Higher minimums incentivize drivers to obtain and maintain insurance coverage, helping to reduce the number of uninsured motorists on the road. This, in turn, decreases the likelihood of victims being left without compensation after an accident involving an uninsured driver.
Aligning Insurance Policies With Today’s Economic Realities
Raising state minimum coverage levels is necessary to address the financial inadequacies of today’s insurance policies. With motor vehicle crashes costing billions of dollars annually and insurance companies only covering half of these costs, reform is needed more than ever.
Higher minimums would ensure that accident victims are better protected, reduce the financial burden on the public sector, and dispel the myths surrounding premium increases and uninsured drivers. The time is now for insurance companies and state regulators to act and bring minimum coverage levels in line with the realities of today’s economy.
If you’ve been injured in a motor vehicle accident and you wish to discuss the specifics of your case in a free consultation with an experienced Tucson personal injury lawyer, please contact us today.