Many motorists need clarification on how much coverage they require because of the complexity and jargon used in the automobile insurance process. You need insurance whether you’ve been driving for 80 years or are still a learner. You must know every detail about automobile insurance to protect your loved ones. To help you decide the right amount of coverage, we’ll examine each state’s types of coverage and minimum car insurance requirements and some expert inputs. Let’s tackle the most important question on every driver’s lips: how much car insurance do I need?
How Much Car Insurance Do I Need?
Determining the minimum vehicle insurance coverage required for your state is essential. An example of policy limits may be “25/50/15”, where the maximum compensation for one person’s injury is $25,000, and $50,000 covers injury from an accident for two or more persons. In case of property damage, the amount of compensation equals $15,000.
The financial costs of accidents sometimes surpass these minimums; thus, they may need to be higher. According to the National Safety Council, non-disabling injury crashes cost more than $40,000 on average in 2021. Verify that your insurance protects your assets and satisfies legal and lender requirements. Being uninsured is a criminal offense and an unsafe driving behavior.
Car Insurance Requirements by State
Every state has its regulations regarding auto insurance. A breakdown of the minimum coverage requirements in different states is provided in the following table:
| State | Bodily Injury Liability | Property Damage Liability | Other Requirements |
| Alabama | $25,000 per person | $50,000 per accident | None |
| Alaska | $50,000 per person | $100,000 per accident | None |
| Arizona | $25,000 per person | $50,000 per accident | None |
| Arkansas | $25,000 per person | $50,000 per accident | None |
| California | $15,000 per person | $30,000 per accident | None |
| Colorado | $25,000 per person | $50,000 per accident | None |
| Connecticut | $25,000 per person | $50,000 per accident | Uninsured/underinsured motorist, Personal Injury Protection |
Other Requirements
Some states have measures demanding motorists take coverage that commences at the actual injury and coverage meant for the liability of other motorists whose functions do not meet the issue.
Which States Don’t Require Car Insurance?
Most states’ financial responsibility laws include auto insurance requirements except for a few jurisdictions. Detailed below is a list of the states that do not require auto insurance:
New Hampshire
Vehicle insurance is not mandated by law in the Granite State. Nevertheless, you must present evidence of adequate funds to fulfill the state’s financial responsibility statute requirements in the event of an at-fault collision. One option is to get auto insurance to cover any accidents that may happen.
South Carolina
Drivers in South Carolina can legally operate vehicles without auto insurance in certain situations. However, to register an uninsured automobile, they must pay $600 and fulfill specific requirements.
Virginia
Similarly, Virginia provides an option to the conventional auto insurance policy. To avoid carrying regular auto insurance, drivers can register their automobiles as uninsured motor vehicles for $500.
How to Estimate Car Insurance Costs
Several aspects must be examined meticulously as these would be the basis for determining the auto insurance fees. To help you estimate how much your auto insurance might cost, we have provided the following guide: To help you estimate how much your auto insurance might cost, we have provided the following guide:
Compare Insurance Quotes
Quotes from car insurers show how much your auto insurance will cost. Compare them to get the best option.
Elements Influencing Price
Several elements influence many one-sided expenses of auto insurance. They include:
- Young drivers who are 25 years old or less are typically considered high-risk environments requiring higher premium rates. The car you drive can be affected by the rates you’re billed. Prices for elite or high-end automobiles tend to be significantly higher.
- Buying lower deductibles or higher coverage limits will possibly mean higher premiums, though it would create a better atmosphere where the financial coverage is considerable even if an accident happens
- Insurers can discount drivers for perfect driving records over the years, free of car accidents and violations.
- The risk of a pay rise differs in different localities due to factors like population density and crime rates.
- Those married or driving more than one car can get a discount. Also, additional drivers will give you a break on your insurance policy.
- Some states’ insurers give credit scores as a weight when selecting premiums.
- The higher the yearly mileage, the higher the chances of having accidents and, therefore, more insurance increases.
Policy Considerations
Policy Type
Your decisions between liability-only and complete insurance policy will have more impact on your premiums. Going through a liability-only policy only affects full coverage insurance policy more.
Insurance Score
The insurance provider determines premiums for insurance policies based on their credit score, which they calculate comprehensively, considering several factors.
Policy Limits and Deductibles
Excellent payouts are likely to follow an increase in premiums, given that the plan may have lower deductibles and higher coverage limits.
Managing Premiums
Avoiding High-Risk Behavior
Safe driving practices and a clean driving record can help keep rates low.
Claims Management with Care
Before filing claims, consider how filing could affect your premiums, especially for small losses or when the repair costs are near or below the deductible level.
Consulting an Expert
An insurance expert from platforms like Beem can advise you on the best opportunity to submit claims and walk you through the policy alternatives to keep expenses in check.
Types of Auto Insurance Coverage
To get the best vehicle insurance policy, you must know its coverage. Here are the types of Insurance coverages:
Liability Insurance
Your liability insurance will cover the damage the accident caused, medical treatment for those involved and damage to property. There are two primary parts to liability insurance.
Bodily Injury Liability
This will cover the medical expenses of passengers, pedestrians, and other drivers who may be injured in the accident.
Property Damage Liability
This covers damage to other people’s vehicles and property during damage.
Liability insurance is a minimum requirement in all states, except Virginia, South Carolina and New Hampshire. However, the insured must ensure extra protection to supplement the added coverage in a major accident, even if the minimums don’t provide enough coverage. Let’s look at the types of liability insurance.
Insurance for Uninsured Motorists
Suppose you meet with an incident with a driver who doesn’t have adequate liability insurance. In that case, the person has the option of uninsured motorist or underinsured motorist (UIM) insurance and be covered for the medical expenses. Although uninsured motorist coverage isn’t mandatory in all jurisdictions, it may be worth the money.
Collision and Comprehensive Insurance
Collision coverage is part of the protection plan, and your vehicle might suffer severe damage owing to overall replacement or repair after an accident. On the contrary, comprehensive coverage concerns non-crash events like theft, vandalism, or a natural disaster. Most lenders require full coverage, and they will stipulate that you have both kinds of insurance.
Personal Injury Protection (PIP)
Even in cases where no one can be traced to be responsible for an accident, PIP will pay for your medical bills and those of your passengers. It also covers the cost of burial, recorded wages, and any other services needed based on your injury. It’s compulsory in many states and voluntary in others.
Medical Payments Coverage
In case of personal or passenger injuries, regardless of the at-fault party, medical payment coverage (MedPay) will pay for your and your passengers’ medical bills. Even if it’s unavailable in every state, it is still a way to add health insurance to your dental insurance policy.
Optional Car Insurance Coverage Types
Gap Insurance
In situations where the vehicle is destroyed, the insurer will pay the sum that is the difference between the balance of your loan or lease, whichever is applicable, and the present-day cash value of the car.
Rental Reimbursement Insurance
Rental reimbursement insurance offers a similar solution: it pays for rental vehicles or other alternate means of transportation after a covered accident.
Roadside Assistance Insurance
Towing, jump-starts, and locksmith help are among the services that may be paid for as part of such a plan during an accident or vehicle breakdown.
Factors That Affect Car Insurance Rates
Driver History
The premium on your auto insurance covers primarily your driving history. Insurers consider incidents such as getting into an accident, receiving a speeding ticket, or the appearance of traffic infringements in the last five years as a warning sign of risky driving behavior, and they evaluate those drivers as potential high-risk clients. However, if you can maintain your driving history free of incidents, you can negotiate cheaper premiums with your insurer.
Vehicle Make and Model
Your car insurance payments vary depending on your car model. A luxury car or SUV has less expensive insurance because of reduced petrol and coach charges. Auto insurers consider theft rates, the availability of safety features, and your usual driving behavior to decide which vehicles to insure. Similarly, insurance rates for sports cars are significantly higher than for family sedans.
Credit Score
A good credit score can help you secure a cheaper insurance premium, whereas a bad one may affect your chances. The credit score isn’t directly related to the way you drive. The higher the credit score, the fewer risks insurers take in terms of insurance premiums because they consider these people more financially responsible. To this end, it’s vital to maintain good credit so that fair rates for insurance can be expected from insurers since people with excellent credit typically pay much less than those with only sufficient credit.
Location
Each auto insurance charge depends on your current residence, so you must consider your current residence. More speeds and accidents from traffic, vandalism, and theft in urban areas lead to higher insurance rates than in rural areas.
Driver Age
Insurance companies view those under 25 as riskier because of their low expertise on paved roads. Your credit history can still positively influence the premium rate even if the subsequently added driver is a younger person. Alternatively, insurers tend to strike discounts on elderly drivers because of their extended experience on the roads.
Vehicle Ownership
With finance and lease agreements, it’s common for a lender to require that you have full coverage of auto collision and comprehensive insurance on your financed vehicle until the car is paid for. With a higher extent of coverage, your premiums will be more significant, so the standard will affect insurance costs.
Marital Status
Premiums for married drivers are usually less expensive than premiums for single people. That’s why you can reduce your overall cost of auto insurance by considering your spouse’s plan. You can also be eligible for discounts depending on the number of cars owned or the discount deals cars.
Safety Features
The premium may be reduced incrementally for the driver’s vehicle, which is equipped with high-level safety equipment such as an anti-theft or collision avoidance system. These features are advantageous because they make the car less likely to be involved in an accident or stolen, and thus, insurance premiums would decrease.
Read Related Blog: What States Don’t Require Car Insurance
Conclusion
While determining the level of auto insurance you may require, it’s important to consider that you will be adequately covered. Opt for complete protection by learning about the state’s minimum insurance accountabilities, researching your options, and considering options that determine your insurance premiums. There are many things to consider and plenty of choices, so seeking professional advice is better. With Beem, you will secure the right policy at affordable rates, giving you the confidence to travel without fear.
