By Michael Korsgaden
WITH MORE UNINSURED AND UNDERINSURED MOTORISTS ON THE ROADS, YOU CAN GROW YOUR AGENCY BY HELPING CLIENTS REDUCE THEIR RISK
We’ve all experienced the reality of Murphy’s Law: whatever can go wrong, will go wrong. We’ve washed our cars, only to have rain splash mud on the hood. We’ve picked a “quick” grocery line, only to wait as a sweet old lady writes a check and chats about coupons with the cashier.
Risk is taking a chance, knowing something could potentially go wrong. These small moments when we take a risk and potentially pay the consequences may make us laugh—after all, a wet car or a slow line is not so bad. But some risks are bigger.
The most recent Insurance Research Council study from 2025 (using 2023 data) shows 15% of drivers are uninsured, with 18% more underinsured, meaning that 33% of drivers could not fully pay a claim if it happened.
This costs insured drivers an estimated $16 billion annually, as they cover damages through higher premiums and claims. And with auto insurance premiums rising significantly in recent times—by as much as 24% in 2023 alone—even more drivers probably lack insurance, making accidents riskier and more expensive.
One in three drivers on the road lack sufficient coverage to pay for an accident.
Rising risks
Murphy’s Law isn’t just about small annoyances—it’s about missing major dangers, like collisions with drivers who lack insurance. With one in three drivers unable to cover an accident, why aren’t clients more worried? Most simply don’t realize how common this risk is, but if they worried more, they’d likely buy coverage like UM (uninsured motorist)/UIM (underinsured motorist) to protect themselves. Two big reasons explain this.
First, though the risk of being hit by someone without adequate insurance is significantly greater today than it was just a few years ago, perceptions change slowly. Before the pandemic, the rate of uninsured and underinsured drivers was about 23%. Since then, however, the cost of an average auto insurance policy has risen about 50%. Unfortunately, this makes some people believe that they cannot afford to buy auto insurance. And since the penalty for not having insurance has often not increased proportionately, there are now more people without insurance.
At the same time, more people are unintentionally underinsured. Accident costs are rising, but state minimums don’t keep up. Many low-income drivers pick low coverage, like $25,000 for injuries, yet crashes cost more. In 2022, an average injury claim was $26,501, often leaving gaps that UIM coverage had to fill. Exact UIM claim costs are tough to find, but with 2025 crashes likely pricier, your clients are probably going to face bigger risks.
The second reason people underestimate the risk of being hit by someone with not enough insurance is that they can’t imagine deliberately choosing insufficient coverage themselves. Most of us assume others think like we do. Middle-class drivers typically move in circles where others similarly believe they have enough auto insurance, even if that’s not always true.
But low-income drivers, facing tighter budgets, often opt for state minimum coverage—like $25,000 for injuries—or skip insurance altogether. In 2010, low-income car owners spent about $823 annually on minimal coverage, compared to middle-class drivers who could typically afford fuller policies, creating a coverage gap that heightened risk on the road.
Peace premiums
An auto accident is bad enough; when the at-fault driver can’t pay, it’s a nightmare, whether in no-fault states like Florida or at-fault states like Texas.
Consider Lisa, a mom with two kids, rear-ended by an uninsured driver. Her broken arm and wrecked bumper means $25,000 in medical bills and $6,000 in repairs—a typical crash. The injury keeps her from work—she can’t type or drive to her job—and her totaled car strands her kids from soccer practice. In Florida, one of the highest uninsured driver states, with over 20% lacking coverage, her personal injury protection (PIP) covers only $10,000 of medical costs, leaving $15,000 in bills and all repairs unpaid. In Texas, an at-fault state, the uninsured driver leaves her stuck with the full $31,000.
Unfortunately, this is not rare, but Lisa’s troubles could have been avoided in two ways. First, the other driver could have purchased sufficient insurance. But Lisa cannot control that. Second, Lisa could have purchased UM/UIM coverage, which pays for hospital bills, repairs and even helps in hit-and-runs.
Surprisingly, UM/UIM coverage costs just $136 a year—about $12 a month—for peace of mind. Even clients with full coverage need it, because accidents with uninsured or underinsured drivers can bring unexpected headaches. Full coverage handles your car and liability, but if the at-fault driver can’t pay, you might face uncovered medical bills, repair delays or even higher premiums as insurers deal with these claims.
Client care
Insurance agents are in the business of helping people manage risk. As the risk of uninsured or underinsured drivers grows, so does your client’s need for expert advice. Selling more UM/UIM coverage can boost premiums while building stronger client trust. Yet, discussing UM/UIM isn’t always standard practice—many agents skip it, assuming clients know about it. Instead, they focus on required coverages like liability, or rush through reviews without explaining UM/UIM’s value.
When I trained as an agent, my mentor pointed out gaps in my own auto coverage. My wife and I had never heard of UM/UIM coverage—neither have most clients. Those that do may not see the need for it, likely because the need for UM/UIM was not always as large as it is today.
They may also be unaware that state minimums, like $25,000 for injuries, often fall short of today’s crash costs, leaving many drivers underinsured. States set these low minimums to keep insurance affordable for low-income drivers, but haven’t raised them, as higher costs could drive more people to skip coverage altogether. Many states haven’t updated these limits in years despite rising accident costs, likely due to the challenge of balancing affordability with better protection.
Agents who know their clients can spot who needs more coverage and guide them to stronger policies. You can use annual reviews to explain this shift, moving beyond the price game to protect your clients from risks they do not expect and build trust that grows agencies. Ask your clients to think about how much they would pay to avoid the risk, then be a hero by explaining that the higher risk can be mitigated for a relatively low cost.
Take Mark as an example, an agent in a busy office. During a routine annual client review, he noticed Sarah, a small-business owner, carried only state minimum liability coverage. She thought her “full coverage” was enough, unaware that a crash with an uninsured driver could leave her paying thousands out of pocket.
Mark shared a quick story about a local hit-and-run that cost a client $25,000 in repairs and medical bills, explaining how UM/UIM could have saved them. Convinced, Sarah added UM/UIM for just $136 a year, thanking Mark for looking out for her. That conversation not only boosted Mark’s premiums but also earned him Sarah’s loyalty and referrals.
Murphy’s Law strikes when least expected, like a crash with an uninsured driver. It can devastate families. Make sure it does not happen to your clients. Explaining the risks will show clients your value as an agent while increasing premiums.
Agents who know their clients can spot who needs more coverage and guide them to stronger policies.
With an insurance license, MICHAEL KORSGADEN contributes to the Korsgaden Insights Community outside his day job in customer success, bringing an outside perspective to the insurance and financial services industry.