In fact, the average auto insurance policy holder in South Carolina pays $43.63 per year to protect against underinsured drivers, twice as much as they pay to protect against those with no insurance at all, $20.62, according to a survey of several major auto insurance providers in the state conducted by the South Carolina Insurance News Service.
"We all hate paying insurance until we need it," said AAA Carolinas spokesman Tom Crosby. "It's silly to be underinsured. It just means that you recognized the value of insurance to some degree, and you're saying, 'If I get into an accident, it won't be a serious one.' "
The problem can cut both ways, costing both parties plenty.
When a motorist gets hit by someone without enough insurance, the first driver may end up paying for damage somebody else caused.
From the standpoint of the underinsured driver, if his policy doesn't cover property damage or medical expenses, then the other driver may take him to court to recoup their loss, Crosby said.
"If you're underinsured and you are at fault in an accident, people can go beyond your insurance and after any assets you have," he said.
About a third of South Carolina auto insurance policy holders -- 33.5 percent -- drive with the minimum coverage limits, according to a survey of five major insurance providers in the state, said Allison Dean Wright of the S.C. Insurance News Service. That's in addition to the estimated 22 percent that have no coverage at all, she said.
Minimum liability coverage in the state is $15,000 in medical fees per person injured, $30,000 in medical fees per accident and $10,000 in property damage. Uninsured motorist coverage is required, but underinsured coverage is not, though a company must offer to provide it up to the same level as the liability coverage, Wright said.
Dean Kruger, chief actuary of the South Carolina Department of Insurance, said the department likely will begin discussing the problem of underinsured drivers in a little more than a year, when the 2005 legislative session begins. Before that, he said, the department will remain focused on its top priority -- drivers with no insurance at all.
Much of the current effort is directed toward catching and punishing drivers without insurance. To that end, a shared database between the S.C. Division of Motor Vehicles and insurance companies will track those who do not have insurance and will be phased in gradually starting in February.
Tackling the problem of insufficient coverage would mostly involve raising the medical and property damage limits for the basic liability coverage, Kruger said.
"The key legislation is just to raise the limits. Of course that could raise the costs," he said.
Before this is possible, Kruger said better enforcement mechanisms would have to be in place. A common argument against raising limits is that more people would not buy any sort of a policy at all, he said.