Do you need auto insurance in the US? Where does a person start to find the best auto insurance policy?
Therefore, the answer is that you have to get car insurance in the United States to drive legally and maintain your license and registration.
However, there is more to this than simply having the minimum amount of coverage to avoid any controversy if you get pulled over. So here are the answers to some of the most common questions about auto insurance requirements in the US.
Why is auto insurance mandatory in the US?
Having an auto insurance policy shows that you can take responsibility for any damages in the event of an accident.
While some states vary in providing a liability insurance obligation, ALL states have some law that requires drivers to provide financial responsibility with a liability policy.
For others, you would have to show proof of enough assets to be able to pay medical bills vehicle damage (more if you are at fault for the accident). If you are unable to provide this proof, legal penalties may include:
- purposes
- Driver’s license suspension
- Suspension of your car registration
Also, if you don’t have car insurance, you could face a financial catastrophe if you’re in an accident and don’t have the means to pay for damages or medical treatment.
Aside from the law requiring auto insurance, most lenders expect you to purchase full coverage auto insurance as part of the terms of your auto loan. This is to protect your asset, which is the car itself.
What is the purpose of car security?
The purpose is to protect you financially and protect your property or that of your lender if your car is financed.
However, the primary purpose is to cover the cost of damage to the vehicle (yours and the other person’s) and medical expenses for injuries. Your auto insurance will cover you even if you don’t own it.
In addition to coverage for medical costs and collision damage, you can purchase auto insurance that covers the costs of fire, theft, or vandalism. However, these additions are not necessary.
Some states also require you to get uninsured or underinsured motorist coverage. Also, in a few conditions, you need to purchase collision coverage that pays for damage to your vehicle in an accident for which you were at fault.
What is the minimum requirement for car insurance?
Liability coverage is the minimum required auto insurance. Similarly, the laws dealing with auto insurance may vary slightly by state. All but two states have minimum liability requirements that all drivers must meet. New Hampshire and Virginia only require that you be able to cover the financial responsibility of an accident.
In many states, the minimum amount of auto insurance covered by law for bodily injury and liability is $50,000 and $25,000, respectively. For the most part, though, when you look at auto insurance, it will read like this: 20/40/10.
The 20 is the minimum amount of liability per person covered in an accident for bodily injury or death ($20,000).
The 40 is the maximum amount it will cover for everyone involved in an accident ($40,000).
Finally, ten corresponds to the amount of coverage that the policy provides for property damage (10,000).
By remembering these three numbers, you will be well informed about the policy’s coverage and choose the one that best suits your needs.
What are the minimum consequences of not getting auto insurance?
Most states penalize an uninsured or underinsured driver with a hefty fine, although each state differs slightly in its penalties. For example, driver’s license suspension in the following conditions:
- Wyoming
- WV
- Colorado
- Alaska
- Wisconsin
- California
- Arizona
- Utah
- Connecticut
- Florida
- Texas
In other states, you could lose your car registration if you don’t have the minimum amount of auto insurance. In addition to criminal penalties and fines, the other driver may sue you for vehicle damage and medical bills if you caused the accident and did not have insurance.
In contrast, auto insurance can protect you from these lawsuits because your insurance company will direct any necessary payments to the other driver once you file the claim.
What if I don’t have a car but still have to drive?
One option to consider is non-homeowners insurance. It’s like having a car insurance policy, but without the car. Provides liability coverage if you borrow or rent a car often. This could help protect your assets if you caused the accident and the other driver sues you.
However, non-owners insurance won’t cover damage if you’re using a car owned by someone in the same household. Also, if you’re using a friend’s car, that person’s liability insurance will cover the damage up to their policy limits. From there, your non-owner’s insurance will take care of the rest.
What if other family members drive my vehicle?
Any member of your immediate household family may also be included in your insurance policy.
Similarly, if you have children who are young adults attending college and living at home for only part of the year, they may also be included in your policy.
What if I can’t afford auto insurance?
You have a few options to consider:
- Negotiate with your agent for a lower rate; otherwise, look to other insurance companies.
- Decide whether or not you need collision coverage by checking the current value of your vehicle (if you’re not financing it).
- Talk to your agent about deductibles. If it is higher, the premiums decrease.
- Ask your agent to inform you about possible low mileage discounts, not having filed previous claims, setting up automated payments, or registering multiple vehicles on the same policy.
Another option is usage-based insurance, whose cost is based on the driver’s habits. So, if you have no previous traffic tickets and low mileage, you could save 10-15% a year on your car insurance.
What states do not require auto insurance?
Only two states, Virginia and New Hampshire, don’t require car insurance, but they do have provisions if you don’t buy a policy:
- New Hampshire: Submit proof that you meet the motor vehicle financial responsibility requirements in the form of an SR-22.
- Virginia: Buy uninsured motorist coverage.
While this exemption may seem ideal, consider visiting an experienced insurance agent who will explain the risks and benefits of not having car insurance in these states.
What are the other types of coverage?
Some locations require other types of coverage in addition to the minimum. When you visit an agent, you’ll become more familiar with the three main types of coverage offered by most auto insurance providers. These include liability, collision, and comprehensive.
Responsibility
This is the minimum you would need to be a legally insured driver. Liability protects the driver in both cases when he is responsible for the accident or if he is considered trustworthy, even though, technically, he did not cause it.
Collision
Auto insurance includes auto repair coverage related to traffic accident cases, no matter who is at fault.
Integral
This coverage incorporates replacing vehicles if damaged by natural disasters or theft.
Rates vary between auto insurance companies, but an agent can help you navigate the various selections while you compare prices to stay within your budget.