Car Insurance in 2023: Everything You Need to Know

Car insurance is a legal requirement for all vehicle owners in the United States. It is a contract between the insurer and the policyholder that provides financial protection in case of an accident or theft. Car insurance policies can vary widely in terms of coverage, cost, and assignments, making it important for consumers to understand the basics of car insurance and how to choose the right policy for their needs.

Why do you need car insurance?

Car insurance is a tool to protect you from financial losses due to accidents involving your car.

In the US, you must have auto insurance. First, it is required by law. Secondly, it is needed to protect you from expenses if you have an accident or another insured event occurs. Otherwise, these losses can be huge.

What are the coverages?

An auto insurance policy combines multiple coverages (or one coverage if you choose to go with the minimum coverage). There are quite a few options, and the best settings should be selected individually for your needs. Here we will tell you more about the most popular ones.

Liability Coverage

Liability Coverage is compulsory car insurance. Its design is required by law. Such coverage extends to someone else’s medicine and property up to the established limits. For example, in California, these limits are $15,000 for one person, $30,000 for a group of people, and $5,000 for someone else’s property.

“It must be taken into account that this law was created about half a century ago when these were serious sums. Now more money is needed. Doubling your limits is now possible with just a few dollars more monthly payments, and I always recommend this option to my clients. 

According to Liability Insurance, I now advise having limits of at least $25,000 for one person, $50,000 for a group of people, and $25,000 for someone else’s property. Otherwise, the difference between the amount of damage and insurance coverage can be very high. And the perpetrator of the traffic accident will have to pay it – immediately or in installments, depending on how the court decides.

Important!

Liability Coverage is the minimum required coverage. You can only get by with them to keep the law. But to protect yourself and, in the event of an accident, pay less out of your pocket, it is recommended to purchase additional protection. Moreover, some options increase the final cost of insurance very slightly.

Uninsured Motorist (Underinsured Motorist)

Uninsured Motorist or Underinsured Motorist is an optional coverage recommended by many agents and brokers. It covers the cost of damages if you are involved in an accident caused by another driver who does not have or does not have enough insurance coverage.

“I think Uninsured Motorist is a must-have cover. It will increase the cost of the payment by an average of only $10 per month – that’s a couple of cups of coffee. With this money, you will save yourself from many problems. 

I recently studied statistics: about 30% of drivers in the US drive without insurance. You can add about 30% more to them, who have insurance with extremely low limits. There are other cases; for example, a person did not pay the insurance bill on time, or the child took the parents’ car without being included in the insurance. If you get into an accident at the fault of such a driver, Uninsured Motorist will cover a minimum of $15,000 for medical and a minimum of $3,500 for a vehicle.”

To receive Uninsured Motorist payments, you must have information about the person at fault if a person damaged your car and fled. Unfortunately, such insurance will not cover this case. 

Comprehensive and Collision Coverage

“Officially, the term Full Coverage, or full auto insurance, often used in everyday speech, does not exist. You will not find it in any contract. When it is said, it means that the insurance covers your car too.

Collision – insurance against collisions in which your car hits another object. This includes when your machine:

• crashes into an object, such as a tree;
• collided with another vehicle;
• turns over;
• damaged due to hitting a pothole.

Comprehensive – in translation, comprehensive, or comprehensive auto insurance, applies to all other cases:

• an object, such as a tree, falls on the machine; 
• an animal collided with a car; 
• the car is damaged due to fire or natural disaster;
• theft, vandalism.

In other words, it is car insurance against any accidents.

“This insurance covers the car’s value up to market value, regardless of what happened to the car and who is at fault for what happened. Here it is necessary to mention the term Deductible – this is the amount we answer in an insured event. For example, if the Deductible is $1,000 and the car is $9,000 damaged, you pay the first $1,000, and the insurance covers the remaining $8,000. The lower the Deductible, the more expensive the insurance. At the same time, the contract does not specify a limit to what amount the car is covered.

The price of auto insurance in America

The price of car insurance depends on the risk; the higher it is, the higher the insurance cost.

Prices can vary significantly from state to state. The minimum coverage will cost $30-$65 per month, depending on where you live. The wider the coverage, the higher the price.

“Different states have different rules for car insurance. In the at-fault states, the insurance company that caused the accident pays out if someone hits your vehicle. In the No-fault states, your insurance covers your car repairs, even if someone else is at fault. In these states, insurance is more expensive.

Most states, namely 38 – Are at-fault states (responsibility lies with the culprit). The remaining 12No-fault (your insurance covers the damage regardless of who is at fault), these are:

1. Minnesota

2. Kentucky

3. Massachusetts

4. Michigan

5. Florida

6. Utah

7. Hawaii

8. Kansas

9. New Jersey

10. New York

11. North Dakota

12. Pennsylvania

For example, insurance for a 30-year-old person who has been driving since 2005 and drives a Toyota Camry will cost from $30 per month in San Diego; the same insurance in Los Angeles will start at $65 per month. Both of these cities are in California.

What affects the cost of auto insurance?

Three main and most important factors affect the price of insurance.

⭆Driving experience. This is the main factor affecting the cost of insurance. For an 18-year-old driver, it will cost much more than for an experienced adult. Moreover, some companies do not specify your driving experience and are guided by age: the older the person, the cheaper the insurance. 

⭆Area of ​​residence. The insurance price depends on the area since different areas have different accident statistics. What matters is where you live, down to the zip code, meaning you can move into the house across the street, and the insurance price will change.

⭆Car. Here the important role is played not by the cost of the car but by how safe it is. For example, a car with a Pre-Collision System (equipped with collision warning sensors) may cost more, but it will be cheaper to insure.

In addition, additional factors may affect the cost, among them: 

• marital status; 
• the number of people and cars included in the insurance;
• insurance limits; 
• how often the driver uses the car.

What can and cannot be saved?

“I encourage my clients to go beyond minimum coverage. It is better to pay $10 more per month for insurance, but be sure that payments will cover a significant part of the costs in the event of an accident. 

Liability Coverage and Uninsured Motorist are what I advise everyone to have. And if you want to save money, save on a couple of cups of coffee.”

In addition, there are insurance discounts, for example:

• for students, 
• for spouses and couples who live together, 
• for people who don’t drive much 
• for those who insure two or more cars at once, 
• for those who pay insurance six months or a year in advance. 

A good agent or broker will ask you questions designed to determine if you have circumstances that reduce the cost of insurance.

“Don’t try to save money by giving false information. For example, there are cases when people do not indicate their address to reduce the monthly payment amount. In the event of an accident, the insurance company can easily find out about it and refuse to pay out. Always provide complete and accurate data when applying for insurance.

How to buy a car insurance policy in the USA?

There are many insurance companies in the US. There are several ways to find out their conditions to decide in favor of one of them.

⭆ Through an agent

Agents are official representatives of insurance companies. Most often, one agent works with only one company. Agents do not charge people for their mediation: they are paid by the insurance company. But for the same reason, they work primarily in the interests of companies and may not offer you the most favorable insurance conditions.

You can contact several insurance companies and clarify the conditions for each one separately. This option will require your time and effort, but you will be able to compare offers and make a choice in favor of the one that suits you.

⭆ Through a broker

Brokers work in the interests of clients. They have the right to decide from whom to take a commission for their services – from the buyer or insurer whose policy they sold. The broker works immediately with many insurance companies, significantly saving you time. It enters information about you into the system and looks at what conditions each company offers and which option is best for you. In other words, the broker helps you save money by choosing the most profitable from all the offers.

“In my agency, we don’t charge clients for services. But in most cases, you will need to pay the broker between $65 and $200. Therefore, when contacting a broker, specify how much his services will cost.

⭆ Self online

“On the one hand, this is a convenient way to purchase auto insurance in the US. However, practice shows that in the case of self-registration, mistakes are often made, or there needs to be a better understanding of coverage options. In the event of an insured event, these moments can be decisive. In addition, after you have bought car insurance online, your case will still be reviewed by an agent, and the price may increase. Therefore, before buying auto insurance online, it is better to call the company and ask the agent to double-check all the data and explain the conditions so that there are no surprises later.

What documents are required to get car insurance?

“Among my clients are many people who have recently arrived in the US. One of the first questions they have is whether it is possible to buy insurance without having an American license. Yes, it is possible, and some companies offer almost the same price to holders of the rights of other countries as to customers with US rights. However, you’ll get the best price if you have a US license over three years old.”

To apply for insurance, you will need the following documents:

• Identity card – preferably a driver’s license, but another document will do.
• Confirmation of residential address.
• Documents for the car. You will be asked for the VIN of the car (not to be confused with the License Plate) – this is an individual number by which information about a particular car is deciphered.

Also, bring documents that you may need to receive discounts – for example, a marriage certificate.

Need insurance: what steps to take?

Step 1: Find out the cost of insurance before buying a car.

“Firstly, you should consider insurance in advance – before buying a car. Specify how much the insurance for the car you plan to buy will cost so that this amount does not become an unpleasant surprise for you.

For example, a new car must take out full insurance in many cases. If you have recently moved to the US and still need to get a US license or are less than three years old, such insurance can cost you twice as much as for drivers who have had a US license for more than three years. Insurance for used cars is cheaper, and you don’t have to take out full insurance.”

Step 2: Contact an insurance agent or broker and decide on coverage.

A real professional will ask several questions, including marital status, financial situation, place of study or work, etc. This is necessary to determine your situation and what discounts you can expect.

Step 3: Provide the required documents and make payment

You can pay for insurance monthly or deposit money several months in advance. When choosing the second option, you get an additional discount, and you can be sure that the insurance cost will not change for you during the paid period, even if you get into an accident.

There was an accident: what to do?

If no one was hurt, the algorithm is as follows:

1. First of all, calm down. The incident has already happened, and your excitement can only hurt. 

2. If it is safe, do not move the vehicle. Leave it where you left it, get out of the car, and take photos.

3. Save the recording from the DVR. 

“I advise everyone to drive with a DVR. In the event of an accident, it will be easier to prove your innocence with it, especially if you do not speak English very fluently.

4. Exchange information with the other person involved in the incident by asking for and writing down their name, phone number, and insurance details. They are indicated on the insurance identification card after the insurance is issued. In the same way, you need to provide your data, regardless of who is to blame.

5. Officially, you need to call the insurance company and tell them what happened. You will be assigned a person who will continue to control the entire process, assess the damage, and assign payments. But I recommend not rushing into this call. By law, you have three days to do it. First, consult with someone who understands this topic – for example, with your broker.

6. If people are not hurt, the police do not come – at least in California, this is the case. But if the other party refuses to provide you with insurance information, call the police – this is already a reason for them to come.

If people are injured, you need to call 911 immediately. Then an ambulance and the police will arrive. 

If something hurts you after an accident, you can find a lawyer. As a rule, he will not take money from you – the insurance will pay for his services. And already the lawyer on your behalf will apply to the insurance company.

Answers to frequently asked questions about car insurance

– Can I work as a taxi or food delivery service driver with regular insurance?

– No, all this is considered Business Use – using a car for commercial purposes. Insurance companies may refuse to pay out after an accident if they know you used the car for work. Therefore, if you plan to work or already work on a car, check with an agent or broker about what insurance options are available in this case.

– Do I need to take out insurance if I rent a car?

–  The car you rent must already be insured. But unfortunately, this is not always implemented in practice. To protect yourself, you can take out Non-Owner Insurance. It is not done on a car but on your driver’s license. This one-way Liability insurance covers any car you don’t own and drive. And if you get into an accident, the insurance will cover the damage of another participant in the accident up to the established limits.

What happens if my car is borrowed by a friend and has an accident?

–   If the driver who took your car was not included in the insurance, the company will pay the Liability part – this means that the coverage will apply to the injured party but not to your car. The main thing is that this person does not live with you. If you want to insure your car in such a case, pay attention to Permissive Use insurance, it will cover your car, even if your friend is driving.

– What about people who live with me but are not included in the insurance?

–  No insurance company will make payments if it finds out that the person behind the wheel lives with you and is not included in the insurance.

How much car insurance do I need to buy?

–  Liability Coverage and Uninsured Motorist – the minimum required to set that will save you from a lot of problems.

What is the cheapest car insurance?

–  The cheapest, it is also a mandatory coverage – Liability Coverage. It is most advantageous to insure two cars and two drivers.

How to avoid becoming a victim of scammers?

–  Check the information about the people you decide to work with and study their reviews. Come personally to the office to see with your own eyes how the company works. Contact at least three places and carefully compare the conditions.