Auto insurance in America can be very confusing. To help you understand it better, here is information about one of its most important aspects: its cost.
How much does an auto insurance policy cost in the United States?
On average, minimum coverage in the United States costs $ 565 per year, while full coverage costs $ 1,674. The most important factor is the state of residence. For example, minimum coverage in Iowa typically costs $ 250 per year. In New York, the average cost for minimum coverage is four times as expensive, more than $ 1,000 per year.
How is the cost of the auto insurance policy calculated?
In general, the cost of an auto insurance policy (also known as a premium) depends on several factors:
The minimum requirements in your state
An auto insurance expert can guide you further on your state’s requirements.
Where do you live
If you live in an area with many accidents and / or criminal activity, you will have to pay a higher premium.
The type of car you drive
The premium will be more expensive if you have a luxury car or sports car.
In general, young people pay more for their policy.
How often do you drive
If you drive a lot, you will have to pay a higher premium.
Your driving record in the United States affects the price of your premium.
To better understand how it can affect your driving record, contact an expert to learn more.
The type of insurance you have
If you only need minimal coverage, you won’t have to pay as much as for insurance with more coverage. But keep in mind that if you only have the minimum coverage and you have an accident where you are at fault, you will have to pay for all the repairs.
The types of auto insurance in the United States
There are three main types of auto insurance:
- Liability insurance
- Crash insurance
- Comprehensive coverage insurance
The liability insurance is mandatory in almost every state. When you cause harm to another person, you have an obligation to repair it. A liability policy covers damage to another person (be it bodily injury or property damage) when you are at fault for an accident.
Javier is involved in a clash with Sonia and Javier is responsible. Sonia has $ 5,000 in medical expenses and the damage to her car is $ 4,000. Javier has liability insurance with limits of $ 5,000 / $ 15,000 / $ 5,000.
How does Javier’s coverage work?
- Since Javier was responsible, Sonia files a claim with Javier’s auto insurance company.
- Javier’s insurance company pays Sonia $ 9,000 ($ 4,000 for medical expenses and $ 5,000 for damage to her car).
- Javier doesn’t have to pay Sonia anything.
What happens when the damages exceed the coverage of the auto insurance policy?
In this case, you would be legally responsible for the rest of the personal and material damages. For this reason, it is always possible to obtain an auto insurance policy that exceeds the minimum coverage.
If you are unsure if your liability coverage exceeds the minimum requirements in your state, an insurance agent can inform you more.
The insurance crash (aka crash Collision) protects your car in case you suffer an accident and be the culprit. With this coverage, a franchise is usually paid.
Marcos suffers an accident for which he is responsible. Property damage to the car costs you $ 10,000.
Fortunately, Marcos has a collision insurance policy with a deductible of $ 1,000 and a maximum limit of $ 15,000.
How does Mark’s coverage work?
- Marcos has to pay the first $ 1,000 of repairs to the car, that is, the value of the franchise.
- After paying the first $ 1,000, there is $ 9,000 left in repairs.
- Auto collision insurance would cover the rest.
- In total, Marcos has to pay $ 1,000 and collision auto insurance covers $ 9,000.
Comprehensive coverage insurance
The insurance comprehensive coverage protects your car if it is damaged when you’re not driving (eg, theft, vandalism or natural disasters). With this coverage, a franchise is usually paid.
A hailstorm damages Arturo’s new car. Repair costs are $ 1,400. Fortunately, Arturo has comprehensive coverage insurance with a maximum limit of $ 1,500 and a franchise of $ 800.
How does Arturo’s coverage work?
- Arturo would pay the first $ 800 of repairs to the car, that is, the value of the franchise.
- $ 600 left in repairs.
- Comprehensive coverage insurance would cover the rest.
- In total, Arturo has to pay $ 800 and the comprehensive coverage insurance pays $ 600.
Is there a minimum or maximum franchise according to the law?
Since civil liability insurance does not have an excess (or deductible), in general, there is no minimum or maximum according to the law. However, it is possible that there are external factors why you need to have coverage greater than the basic one. For example, if you lease your car, the contract likely requires you to carry a collision insurance policy. In many cases, the contract also dictates the maximum excess for such a policy.
How does the deductible affect the cost of your auto insurance?
A policy with a low excess means that the company is more likely to have to cover the expenses of an incident, which is why it is more expensive.
If your priority is to save as much as possible, it is better to choose a policy with a higher excess. The downside is that you would have to pay a large unexpected amount if you have a collision or accident.
If you prefer to anticipate your expenses in the long term, it is better to have a policy with a lower excess or no excess. The big disadvantage is that you need to pay more, even when you are not involved in any accident or collision.
Is it possible to receive a discount on the cost of car insurance?
In many cases, it is possible to receive a discount on your auto insurance premium:
- Not having had accidents in recent years
- Not having had a traffic ticket in recent years
- Pay the premium in advance
- Attend a defensive driving course
- Have multiple policies in one address
Contact your auto insurance company to learn more about all possible discounts.
Keep in mind that, in many cases, an auto insurance policy is valid for six months. This means that you must divide a quote by six if you want to consider the monthly cost.
In many cases, the insurance premium can be paid all at once or in partial payments. A quote usually includes the options available for partial payments.
How do I pay the auto insurance premium?
You can pay electronically by credit card or bank transfer. However, it is still possible to pay by other means (for example, money order or cash). Your agent can inform you about all payment methods.
Do not leave for tomorrow what you can do today
Keep in mind that car insurance can only protect you after you have started the policy. For example, if you contract with an auto insurance company the day after a collision, it will not cover the expenses of the accident the day before. For this reason, it is important to be proactive and start an auto insurance policy as soon as possible. You never know what will happen tomorrow!