THE MORNING RANT: Uninsured Motorists, Illegal Aliens, and the Soaring Cost of Auto Insurance

The cost of auto insurance, for those of us who actually keep our vehicles insured, has increased dramatically in the past few years. According to the Bureau of Labor Statistics (as reported by US News), the cost of car insurance increased by 56% from 2020 to 2025.

There are obviously many inputs into the increased cost of insurance, including the obvious one - an increase in the cost of repairs, because vehicles are more expensive and more complicated than ever before. Most news stories will also lazily throw in tariffs or supply chain problems as contributing reasons. But there is another worsening problem that is a major cause of rising auto insurance premiums, and that is uninsured drivers. Coincidentally, the surge in uninsured drivers over recent years neatly coincides with President Biden and Alejandro Mayorkas throwing the border open wide to millions of illegal aliens.

Per the Insurance Research Council’s most recent full year data (2023), there has been a huge increase in the number of uninsured drivers. In 2019, 11.6% of drivers lacked automobile liability insurance, but just four years later in 2023 that number had increased to 15.4% of drivers. Another way to state this is that in 2019, one in nine drivers were uninsured, but in 2023 that number had deteriorated to one in six. This data is sourced from insurance claims where an insured driver had to use his Uninsured Motorist Coverage to make a claim, because the party at fault in the wreck did not have insurance.

But this also means that wrecks between two uninsured motorists go unnoticed by the Insurance Research Council (“IRC”), as do single car wrecks involving uninsured motorists, since they obviously cannot make an insurance claim. It can be extrapolated then that the percent of uninsured drivers is even higher.

Compounding the problem is the growing number of drivers who are underinsured, meaning they have liability insurance at the minimum amount required to register a vehicle and/or obtain a drivers license, but the amount of insurance is woefully insufficient. For instance, Texas’ minimum requirement for liability insurance covers just $25,000 of physical damage per accident, which is less than the replacement cost of most cars on the road, and much less than the average cost of most new cars. In California, the amount is just $15,000.

Per the IRC, in the same four-year span of 2019, the number of underinsured motorists increased from 12.2% of drivers to 18.0%.

In summary, here is the expensive truth:

• More than 33% of accidents involve drivers who are either uninsured or underinsured, meaning they do not have sufficient insurance to pay for the damage they caused. This is up from 23% in just four years.

• Therefore, one in three wrecks require the party not at fault to file a claim against his own insurance company, using his “Uninsured Motorist Coverage.”

• This also means that those of us obeying the law and properly maintaining our insurance are subsidizing uninsured and underinsured drivers.

I have insinuated that the rise in uninsured motorists corresponds closely with the Biden-era influx of illegal aliens. While correlation alone does not prove causation, there is data indicating that the influx of non-citizen drivers has been a major contributor to the rise in uninsured motorists.

In a post of mine from September titled “Tricolor Auto’s Failure Has It All - ESG, Woke Capital, Illegal Immigration, Securities Fraud, Government Diversity Programs, BlackRock, etc” I documented that Tricolor was a company that sold and financed used cars, and its primary market was Spanish-speaking illegal aliens. It was the 7th largest used car dealer in the country, with a huge market presence in California and Texas. Tricolor went spectacularly bankrupt when President Trump’s crackdown on illegal aliens brought sales to a standstill and widespread defaults on loan repayment.

What I didn’t document was Tricolor’s role in putting drivers on the road who weren’t properly insured. The simple truth is that a critical aspect of selling used cars to high-risk drivers is that liability insurance must be obtained to get a vehicle registered, so there is an industry that provides 30-day liability insurance policies to these high-risk drivers. Once the vehicle is registered, it is extremely common for the insurance to lapse after 30 days. The actuarial risk these companies are taking is that the high-risk driver can make it one whole month without causing a wreck before the insurance lapses. Since Tricolor needed its customers insured, albeit briefly, it established its own insurance agency which worked exclusively with “nonstandard” insurance carriers to provide the 30-day policies necessary to sell a car. Per an article from 2019 in Auto Remarketing magazine, “Tricolor Insurance Agency, an affiliate of Tricolor Auto Group, currently serves as an agent for 10 nonstandard carriers and markets its services throughout Tricolor’s 28 dealerships and through its eight Ganas dealerships in southern California.” This article estimated that even in 2019, nonstandard insurance comprised about 30% of the personal auto insurance market.

Because the insurance being sold by nonstandard insurers is the bare minimum required to get a vehicle registered, that also effectively means that every driver with nonstandard insurance is “underinsured” until their insurance lapses, at which time they are completely uninsured. This also means that pretty much every customer Tricolor sold a vehicle to did not have sufficient insurance coverage to pay for the wrecks they caused. And for every vehicle Tricolor sold, there were many other vehicles sold to the same customer base by other used car dealers.

As bad as this all sounds, it gets even worse. Ace of Spades reader “Sabrecav” educated me on just how unsavory the nonstandard insurance racket is. Although their market is customers who are otherwise uninsurable, if a customer with a nonstandard insurance policy gets into a wreck before his policy lapses, the nonstandard insurers are very aggressive about refusing to pay claims. Sabrecav provided me a link to this story as an example:

“Crash victims say 'non-standard' auto insurance companies are not fairly compensating them” [ABC7Chicago – 02/18/2025]

Drivers must have insurance in Illinois, and non-standard insurance legally covers those who are a high risk or have a bad credit history. But some people who were hit by drivers with non-standard insurance say they are getting lowballed on claims.

Debra Smith has been battling the Chicago-based driver's insurance company American Alliance Casualty. It is a non-standard auto insurer. She says the process was slow and she was offered much less than she thought she would get.
"They're saying $1,000. That won't be - that's not even the amount of money to get to replace the stuff," Smith said.
An estimate from her body shop said repairs could be $5,320. And American Alliance Casualty is saying that it will only cover $805 dollars of its own $1,000 estimate because its only accepting 75% of liability.

The Biden-era open-border policy has been costly and destructive to this country in so many ways. One of those is the cost being borne by those of us who maintain auto insurance, because we are paying for the increase in wrecks caused by uninsured illegal aliens.

[buck.throckmorton at protonmail dot com]

posted by Buck Throckmorton at 11:00 AM

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