How to Budget for Insurance

The cost of insurance can be a big hit to your personal bottom line. That’s especially true when you consider all the types of coverage you may need to pay for, including auto, health, and life insurance plans. Here are some tips for how to budget for insurance without compromising your lifestyle.

A young Asian woman sits at a tabletop writing in a notebook about how to budget for insurance.

Steps for Budgeting for Insurance

In addition to being legally required in many instances, insurance is often a good investment for your wallet and your peace of mind. The expense of insurance can actually save you money in the long run.

Budgeting for insurance may seem complicated, but it really comes down to two simple actions: First, decide what type of insurance you need. Then, start budgeting for it. Here are five steps for incorporating insurance into your personal finances.

1. Decide how much insurance you need

For each type of insurance you decide to get, you’ll need to decide how much coverage to buy. When it comes to insurance, cost shouldn’t be the only factor in your purchase decision. Instead, think critically about how much coverage you need. If you’re not sure how much insurance or what type to get, consider talking with an insurance agent for advice.

Do you need your homeowner’s insurance to include liability in case someone else is injured on your property? Is term life or whole life insurance better for your situation? Who needs to be covered by your auto insurance?

2. Get quotes from agents or online

Once you know what type of insurance you want and how much coverage you need, get some quotes. Shop around and get quotes from multiple companies. Remember to compare the coverage and not just the premium price—you might find that you’re getting a much better value when paying only a little more a month with one company over another.

3. Find out what the payment schedule is

Discuss the payment schedule before you agree to an insurance policy. It’s common for auto insurance companies to offer a significant discount if you can pay for six months of insurance at a time, for example. Here are some common pay schedule options for various types of coverage.

  • Home Insurance: Paid annually or biannually, often out of escrow if you have a current mortgage
  • Car insurance: Paid every six months or monthly
  • Life insurance: Paid monthly
  • Health insurance: Paid monthly or via pretax deductions from your paycheck if the coverage is through your employer

Understanding the payment schedule will help you budget for insurance more effectively.

4. Set aside enough money monthly

However you plan to pay for insurance, break the amount down into a monthly budgeted amount. For example, if your home insurance is $900 every six months, set aside $150 every month. It’s much easier to budget for $150 than it is to come up with $900 all at once.

5. “Pay” the bill monthly

If you do pay monthly, go ahead and budget so that you can pay your insurance bill at least a week before it’s due. That leaves you plenty of wiggle room if something ever comes up.

If you don’t pay monthly, act like you do. Move the monthly budgeted amount into a savings account and don’t touch it. Act like it’s not there so you’re not tempted to use it on something else and risk not having the money when the bill comes due.

How to Budget for Different Types of Insurance

Trying to include a large insurance expense in an already tight budget can be difficult. Here are some tips for making various types of insurance potentially more affordable so they are easier to budget for.

Car Insurance

The average American pays around $2,388 per year on auto insurance. But your actual expense can vary widely depending on your age, state of residence, type of car, credit score, and many other factors. Here are some tips for saving money on car insurance.

  • Increase your deductible. You may need to shell out a bit more in the event of an accident, but you can save a lot of money on your premiums.
  • Ask about discounts if you’re married, have multiple cars, are buying different types of insurance from the same company, or are a good driver. Some insurance companies also offer discounts for students with good grades.
  • Lower your liability amounts. This can reduce premiums, but you should ensure that it’s a good move for you financially overall.

Health Insurance

According to numbers from the Kaiser Family Foundation in 2018, the average amount people were contributing to their employer-sponsored health care plans each year was $1,186 for single coverage. You don’t have to pay that much for health insurance, though. Some ways you can save on this expense, especially if you’re purchasing as an individual through the marketplace, include:

  • Buy a plan with a higher deductible.
  • Enter all your income data into the marketplace application form to see if you qualify for subsidies or credits.
  • Apply for Medicaid if you’re eligible.

Life Insurance

The cost of life insurance depends heavily on your age, the type of insurance, and how much you’re purchasing. If you’re young, you might want to buy a whole-life policy that you can pay for now and still have when you’re older. If you’re older, you may want to opt for term life insurance, which is cheaper than other types.

Homeowner’s or Renter’s Insurance

One of the reasons insurance costs might be lower is because the company sees you as less of a risk. Homeowner’s and renter’s insurance may be cheaper for those that invest in security measures such as home security systems.

The Bottom Line on How to Budget for Insurance

You can get discounts and great deals on insurance if you’re willing to do your research. But, in most cases, insurance may still be a sizeable expense. Planning ahead and budgeting every month for these expenses is one of the best ways to ensure you can afford the coverage you need.

And since your insurance costs are sometimes impacted by your credit score, make sure you’re keeping up on all your other bills and reviewing your credit reports regularly.

DISCLAIMER. The information provided in this article does not, and is not intended to be,  legal, financial or credit advice; instead, it is for general informational purposes only. 

Source: credit.com

The Best Car Insurance Companies in Florida

The search for the best car insurance company entails digging into such factors as price, coverage options and customer satisfaction. And things get more complicated when you are choosing auto insurance in Florida. That said, we break down how you can choose insurance you’ll afford while feeling comfortable with your choice in auto insurance carrier.

Florida has some of the highest car insurance rates in the nation due to factors like its weather, its no-fault insurance law and the high rate of uninsured drivers. In fact, the Insurance Information Institute reports that Florida had the sixth highest in uninsured drivers in 2019 at 20.4%, the year with the most recent data.

That said, you can still find an insurance company in Florida that provides excellent coverage within your budget. We took a look at the best insurance carriers that serve Florida and picked our five favorite ones, including the best overall auto insurance company in Florida. (Spoiler alert: It’s Geico.)

The factors that influence how much car insurance companies will charge you include your age, marital status, driving history and even ZIP code. Each insurer weighs those factors differently. The best strategy for finding cheap car insurance in Florida will always be to compare quotes. Just make sure the quotes you get are comparable in coverage, and of course, check out our reviews below.

In this article

Methodology

When comparing Florida auto insurance companies, we used our SimpleScore Methodology to consider factors such as discounts, coverage, support, customer satisfaction and accessibility.

We also looked at authoritative reviewers and gatherers of auto insurance statistics such as J.D. Power, Bankrate, Insurance Information Institute and Consumer Reports. Bottom line: We’ve worked to give you the best advice about car insurance in Florida.

The best car insurance companies in Florida

These insurers were ranked at the top of J.D. Power’s 2020 U.S. Auto Insurance Study in the Florida region. J.D. Power is a global leader in customer service surveys. These insurance providers also have excellent marks on our own SimpleScore and have gained the notice of Consumer Reports and the Insurance Information Institute.

  • Geico — Best overall for Florida auto insurance
  • State Farm — Best for Florida auto insurance claims customer service
  • Allstate — Best overall for Florida auto insurance customer service 
  • Progressive — Best for Florida auto insurance coverage options
  • Liberty Mutual — Best for Florida auto insurance discounts

Best overall for Florida car insurance – GEICO

When compared to other Florida auto insurance providers, Geico got top marks both from J.D. Power and Consumer Reports. Why? This carrier’s scores for claims and non-claims service were excellent. In fact, Geico is our favorite all-round Florida auto insurance carrier.

J.D. Power Rating

3/5

AM Best Rating

A++

Standard & Poor’s

AA+

SimpleScore

4.8 / 5.0

SimpleScore GEICO 4.8

Discounts 5

Coverage Options 5

Customer Satisfaction 4

Accessibility 5

Among the auto insurance carriers we track, Geico’s premiums were among the lowest for average minimum coverage, at $433 (per Bankrate’s 2020 data), which is actually also one of the lowest among the Florida providers we like best.

In addition to ranking among the best with J.D. Power for auto insurance companies in Florida (846 out of a score of 1,000) in 2020, we found that Geico was one of the largest auto insurance providers in 2019, according to the Insurance Information Institute, with almost 14% market share. We found that coverage options were robust, with 11, and discounts were quite plentiful, with 16.

Best for Florida car insurance claims customer service – State Farm

We consider State Farm to be the best in claims service satisfaction, an assertion backed up by its strong ratings with Consumer Reports.

J.D. Power Rating

4/5

AM Best Rating

A++

Standard & Poor’s

AA

SimpleScore

4.6 / 5.0

SimpleScore State Farm 4.6

Affordability 4

Coverage Options 5

Customer Satisfaction 4

Accessibility 5

State Farm’s wide reach can be a major attraction for some, with more than 19,000 independent agents and over 16% of the market share among auto insurance direct premiums written. This ensures that such benefits as the number of coverage options (we counted 13) is at your fingertips.

Over at Consumer Reports, we found that State Farm gets a 4 out of 5 for both claims and non-claims service satisfaction, although the company doesn’t rank as well for premiums and policy review satisfaction.

Best overall for Florida car insurance customer service – Allstate

When compared to other Florida auto insurance carriers for overall customer satisfaction, Allstate landed on top, with a J.D. Power score of 851 out of 1,000.

J.D. Power Rating

3/5

AM Best Rating

A+

Standard & Poor’s

A-

SimpleScore

4.4 / 5.0

SimpleScore Allstate 4.4

Discounts 3

Coverage Options 5

Customer Satisfaction 4

Accessibility 5

Allstate is a solid provider of car insurance, with good coverage options, customer support and accessibility. This carrier offers two apps: QuickTrip, which provides support for routing daily trips and maintenance reminders, as well as Allstate Mobile, which can be used for filing claims and other tasks.

This carrier is not a favorite for premium prices: Consumer Reports only gives Allstate a 1 out of 5 in that category, although the company ranks well with claims satisfaction, with 4 out of 5.

Best for Florida car insurance coverage options – Progressive

Progressive is the best in coverage options in our estimation, when compared to other Florida insurance providers, with 13 at our count.

J.D. Power Rating

3/5

AM Best Rating

A+

Standard & Poor’s

AA

SimpleScore

4.2 / 5.0

SimpleScore Progressive 4.2

Discounts 4

Coverage Options 5

Customer Satisfaction 4

Accessibility 4

When it comes to claims satisfaction, Progressive performs well, says Consumer Reports, with a 4 out of possible 5. The Progressive app is also robust, with the ability to get roadside assistance, file a claim and more.

Progressive is middle to top of the pack in premium costs for Florida auto insurance. Bankrate found that average minimum coverage was $1,356, near the top of the providers we follow, while full coverage was middle of the pack at $2,573. That said, Progressive has definite advantages as a large, established insurer.

Best for Florida car insurance discounts – Liberty Mutual

Of the Florida auto insurers we compared, Liberty Mutual won out with its insurance discounts (we counted 17). Options include such discounts as rewarding you for driving a hybrid or electric vehicle and even if you get a quote from this company before your policy runs out.

J.D. Power Rating

3/5

AM Best Rating

A

Standard & Poor’s

A

SimpleScore

4.8 / 5.0

SimpleScore Liberty Mutual 4.8

Discounts 5

Coverage Options 5

Customer Satisfaction 4

Accessibility 5

Liberty Mutual is also one of our strongest in coverage options, with 18 counted. One nice feature is that you can have the option for original manufacturer replacement parts, which means that if you have a Toyota Camry, you can get parts made by Toyota, not an after-market manufacturer.

Consumer Reports found that Liberty Mutual did not enjoy the satisfaction in premium prices that you might hope for, but satisfaction in claims processing was strong with 4 out of 5.

[ Read: Steps to Switch Car Insurance Companies ]

Choosing your Florida car insurance provider

One of the first decisions you’ll have to make when signing up for car insurance is whether to choose a local or national carrier. Both come with advantages and disadvantages.

Local carrier

Pros 

  • A personal relationship with your agent.
  • Services that are specific to your location.

Cons 

  • Fewer discounts.
  • Fewer digital tools.
  • Slower claims process.

National carrier

Pros

  • More discounts.
  • Faster claims process.
  • More money to invest in digital tools.

Cons 

  • May not have an individual agent.
  • Less of a personal touch.

Florida’s minimum insurance requirements

Florida’s minimum insurance requirements are the lowest in the U.S., with 10/20/10 in bodily injury liability and property damage liability. That’s as of March 2021.

What does that mean? Coverage must include up to $20,000 for everyone in an accident (middle number), subject to a limit of $10,000 for one person (the first number), and $10,000 for property damage (the last number). Also, instead of policy limits, policyholders can satisfy the requirement with a combined single limit policy. 

By comparison, Maine’s and Alaska’s minimum required coverages are at 50/100/25. (For Maine, policyholders must also carry coverage for medical payments.)

Property damage

Florida requires that all drivers carry a minimum of $10,000 in property damage liability insurance. This coverage will protect other drivers from financial loss in case you are at-fault for an accident and damage another vehicle. Failure to do so can result in the suspension of your registration or driver’s license.

Personal injury protection

Florida is one of a handful of no-fault auto insurance states. This means that regardless of a car accident, each driver is responsible for covering their own medical bills. As a result, the state requires that all drivers carry at least $10,000 in personal injury protection. This coverage will pay for 80% of medical expenses from a covered accident.

Taxi insurance

Florida requires that taxis carry extra car insurance to protect their passengers. Vehicles registered as taxis in the state must carry at least $125,000 bodily injury liability per person, $250,000 bodily injury liability per accident, and $50,000 property damage liability per accident.

How much does car insurance cost in Florida?

Drivers in Florida pay $2,364 annually for full coverage and $1,101 annually for minimum coverage, according to Bankrate records.

Florida car insurance can get high depending on the ZIP code, as much as $3,314 in Miami, the state’s largest metropolitan area. (Miami-Dade is one of the largest counties in population in the U.S., with almost 2.8 million in 2018, according to the U.S. Census.)

Meanwhile in North Florida, Tallahassee has some of the cheapest premiums for the state, according to Bankrate.

City Average annual premium for full coverage
Jacksonville $2,230
Miami $3,314
Orlando $2,405
Tampa $3,027
Tallahassee $2,043
St. Petersburg $2,662

Bankrate uses Quadrant Information Services to analyze 2021 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Quoted rates are based on a 40-year-old male and female driver with a clean driving record and good credit.

Car insurance FAQs

Florida drivers face a variety of unique circumstances that make car insurance rates more expensive. Factors that cause Florida car insurance rates to be high include:

  • The state’s no-fault insurance law.
  • A high rate of older drivers.
  • A high rate of uninsured drivers.
  • High rates of inclement weather.

Florida requires that drivers carry $10,000 of both property damage liability and personal injury protection coverage. But you can certainly choose to purchase more insurance, and you may want to. Florida’s minimum requirements don’t provide any protection for your vehicle, only for other drivers. If you want your car to be covered in an accident, increase your coverages.

Both collision and comprehensive coverage protect you in case of damage to your vehicle, but they apply to very different situations. Collision coverage protects you in case of a car accident. Comprehensive applies to situations where your car is damaged for a reason other than an accident, such as vandalism, theft or inclement weather.

We welcome your feedback on this article and would love to hear about your experience with the insurers we recommend. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com

The Best Car Insurance Companies of 2021

Ease of filing claims, customer service, discounts for such habits as being a good driver or student — these are some of the criteria we look at when choosing the best auto insurance companies on our radar.

The standout was Amica Mutual Group, with its perfect SimpleScore of 5 out of 5, but the others that made our list have their own impressive story to tell, such as State Farm for teen drivers and USAA for military members and their families. Bottom line? You’re bound to find an insurance provider you love from our list.

[Related: What’s the Average Cost of Car Insurance In the U.S.?]

The 10 best car insurance companies of 2021

Rank Company SimpleScore Best insurance company for:
1 Amica Mutual Group 5.0 Best overall car insurance
2 American Family 4.8 Best car insurance for diminishing deductible 
3 Geico 4.8 Best car insurance for customer support
4 Liberty Mutual 4.8 Best car insurance for coverage options
5 State Farm 4.6 Best car insurance for teen drivers
6 Nationwide 4.5 Best car insurance for safe drivers
7 Farmers 4.4 Best car insurance for state-specific discounts
8 USAA 4.4 Best car insurance for military members
9 Allstate 4.4 Best car insurance for accessibility
10 Progressive 4.2 Best car insurance for maximizing savings

Why trust us in finding the best car insurance?

Our research methodology

We’ve created the SimpleScore™ to help you objectively compare products and services here at The Simple Dollar.

Our editorial team:

  • Identifies five factors to compare across each brand
  • Determines the rating criteria for each factor
  • Calculates an average of those five factor scores to get one SimpleScore™

We break down each of these five factors and their rating criteria for our review of the best auto loan companies of 2021.

Why do some brands have different SimpleScores™ on different pages?

Some brands like Bank of America, Wells Fargo, and Chase have different SimpleScores™ because they offer more than one financial solution — like auto loans, home loans, personal loans and banking.

The Simple Dollar also looks at external studies from authoritative sources such as Consumer Reports, the Insurance Information Institute, AM Best and J.D. Power for inspiration.

[Related: The Best Cheap Car Insurance Companies of 2021]

In this article

Best car insurance companies reviewed

Best overall car insurance company – Amica

Amica Mutual is our best overall for auto insurance, gaining our notice in customer service, accessibility, discounts and coverage options.

J.D. Power Rating

5/5

AM Best Rating

A++

Standard & Poor’s

AA

SimpleScore

5 / 5.0

SimpleScore Amica 5

Discounts 5

Coverage Options 5

Customer Satisfaction 5

Accessibility 5

In addition to top marks from our own SimpleScore, Amica Mutual got the attention of Consumer Reports for claims, service and policy review. There was a bit of a markdown for satisfaction in price of premiums, but the rating was still solid when compared to competitors.

This provider offers your standard fare of auto coverage, including comprehensive, collision and uninsured motorist, then offers extra features that you might not find elsewhere, such as free airbag repair.

Customers can get a free quote online and customize coverage options to meet their driving and coverage needs. Amica also makes it easy to report and track claims online and hassle-free. You can get a number of discounts for big savings on your policy, too. You’ll save when you’re accident-free for at least three years and when you take a driver safety class.

Best car insurance for diminishing deductible – American Family

The best insurance company for diminishing deductible, American Family rewards you for safe driving by crediting your deductible $100 each year ($50 with a six-month policy term) up to your policy maximum.

J.D. Power Rating

N/A

AM Best Rating

A

Standard & Poor’s

A

SimpleScore

4.8 / 5.0

SimpleScore American Family 4.8

Discounts 5

Coverage Options 5

Customer Satisfaction 4

Accessibility 5

With 18 discounts offered, this insurance provider leads the pack with some unusual ways to save, such as discounts for young volunteers and for having a parent who is an American Family customer.

American Family’s SimpleScore is practically perfect, with top marks for accessibility and support. You can choose how you want to get help from using the online chat to talking to an agent.

While this insurance company didn’t make the top 10 with J.D. Power for claims satisfaction in 2020, it did rank in the top 20, with a score of 862 out of a possible 1,000. You’ll experience ease in filing a claim, with the ability to file by app, by phone or online.

Best car insurance for customer service – GEICO

Geico is our favorite for customer service, with its handy virtual assistant, access to insurance agents and more.

J.D. Power Rating

3/5

AM Best Rating

A++

Standard & Poor’s

AA+

SimpleScore

4.8 / 5.0

SimpleScore GEICO 4.8

Discounts 5

Coverage Options 5

Customer Satisfaction 4

Accessibility 5

Geico caters to the tech-savvy consumer, which is great for those who don’t want to speak to an agent or listen to the never-ending elevator music while you’re on hold. With the ability to personalize your alerts and access all of your important information, Geico Mobile makes things easy.

Geico’s range of coverage includes the standard fare — collision, comprehensive and liability insurance. Unlike many other companies, rideshare insurance for Lyft and Uber drivers is also available. 

Geico does offer mechanical breakdown coverage, though it’s only for new cars less than 15 months old with less than 15,000 miles. While it’s not applicable to all people, if you fall into this category, you’ll be able to renew mechanical breakdown coverage for up to seven years or 100,000 miles.

Best car insurance for coverage options – Liberty Mutual

We found that Liberty Mutual offers the best in coverage options just by sheer volume — we counted 18. There’s even coverage for teachers while on school grounds and for driving to Mexico.

J.D. Power Rating

3/5

AM Best Rating

A

Standard & Poor’s

A

SimpleScore

4.8 / 5.0

SimpleScore Liberty Mutual 4.8

Discounts 5

Coverage Options 5

Customer Satisfaction 4

Accessibility 5

In addition to top-notch coverage options, Liberty Mutual offers among the most in discounts. In addition to alternative energy discounts and a good student discount, this provider rewards you for military service and even has an early shopper discount that rewards you for getting a quote and signing up before your current policy expires.

This insurance company came in 14th among auto insurance providers in J.D. Power’s 2020 claims satisfaction study, with a 867 out of a possible score of 1,000. Liberty Mutual’s app allows you to file and track claims from your phone, or the company promises a 5- to 10-minute process when filing online.

Liberty Mutual did not fare well with satisfaction in price of premiums, according to Consumer Reports, although they came off quite well in satisfaction in the handling of claims.

Best auto insurance for teen drivers – State Farm

State Farm is our favorite for teen drivers. In addition to the ubiquitous good student discount, this auto insurance provider offers two programs that encourage safe driving habits.

J.D. Power Rating

4/5

AM Best Rating

A++

Standard & Poor’s

AA

SimpleScore

4.6 / 5.0

SimpleScore State Farm 4.6

Affordability 4

Coverage Options 5

Customer Satisfaction 4

Accessibility 5

State Farm is the largest U.S. auto insurance provider by direct premiums, holding 16% of the market in 2019, according to the Insurance Information Institute. We know the size of a company shouldn’t be all we look at, but there are times when it comes in handy.

When it comes to support and accessibility, this provider gets full marks. Count on finding an agent when you need to — access to 19,000 independent contractor agents shows the power of working with a large company.

But if you don’t have time for a phone call, the State Farm mobile app allows you to contact a representative or send a picture of the damage. A user-friendly app is something we often take for granted, but not all companies have this luxury.

Best car insurance for safe drivers – Nationwide

Nationwide is our clear favorite for the safe driver. In addition to possible eligibility for a lower rate if you have at least five years of safe driving, benefit from the proprietary SmartRide® program and get 10% for signing up.

J.D. Power Rating

3/5

AM Best Rating

A+

Standard & Poor’s

AA+

SimpleScore

4.4 / 5.0

SimpleScore Nationwide 4.4

Discounts 3

Coverage Options 5

Customer Satisfaction 4

Accessibility 5

In business since 1926, this insurance provider serves all 50 states and is among the leading companies in the industry. In fact, Nationwide ranked eighth in 2019 in the nation for auto insurance by direct premiums written, according to the Insurance Information Institute, with 2.5% of the market share.

While Nationwide received strong marks for claims-related service from Consumer Reports, it didn’t fare so well with only a 1 out of 5 for premium prices. Interestingly, Bankrate found that Nationwide was one of the highest for average full coverage premium, at $1,485 a year.

We liked Nationwide for its coverage options and discounts — in fact, Nationwide’s number of coverage options was one of the highest of the companies we reviewed, with 15.

Best car insurance for state-specific discounts – Farmers

Even with strong nationwide discount options, Farmers is a standout for state-specific discounts as well. In some states, you can get discounts for having daytime running lights, VIN etchings, and in California only, alternative fuel.

J.D. Power Rating

2/5

AM Best Rating

A

Standard & Poor’s

A

SimpleScore

4.4 / 5.0

SimpleScore Farmers 4.4

Discounts 4

Coverage Options 5

Customer Satisfaction 4

Accessibility 5

Farmers is at the absolute top for coverage options among the insurance providers we track, with 19, including customized equipment like aftermarket infotainment systems and drivers for rideshare companies like Lyft and Uber.

Farmers had an eye-popping $2,000 average in full coverage premium, according to Bankrate. That was only outdone by one other auto insurance company that Bankrate tracked, MetLife at $2,123. The same is true with minimum coverage average, which was $808 for Farmers, making it No. 2 after MetLife at $821. (Bankrate used Quadrant Information Services in February 2021 to pull these numbers.)

This insurance provider’s customers report strong satisfaction in claims processing, Consumer Reports found, something that can give you peace of mind when choosing insurance.

Best car insurance for military members – USAA

USAA is our favorite for military members and their families among auto insurance providers, and for good reason. They get top marks with JD Power for auto claims satisfaction, as well as a perfect score from Consumer Reports.

J.D. Power Rating

5/5

AM Best Rating

A++

Standard & Poor’s

AA+

SimpleScore

4.4 / 5.0

SimpleScore USAA 4.4

Discounts 4

Coverage Options 5

Customer Satisfaction 5

Accessibility 4

USAA fares well on our SimpleScore as well. Count on excellence in customer service and discounts. However, this provider isn’t available to everyone. Only active service members, veterans and their families are eligible for a car insurance policy through USAA. 

Given there are such strict restrictions, you should expect the quote process to take longer and be more involved than other competitors. However, that’s a small price to pay for its exemplary service and established reputation.

This insurance provider offers some of the lowest average premiums — Bankrate reports that USAA’s average minimum coverage premium is one of the lowest among the providers we follow, at $384; its full coverage premium average is actually the lowest of the ones Bankrate tracks, at $1,225.

Best car insurance for accessibility – Allstate

We like Allstate the best for accessibility, meaning we appreciate the ease in filing claims and transparency of information, such as coverage options and discounts.

J.D. Power Rating

3/5

AM Best Rating

A+

Standard & Poor’s

A-

SimpleScore

4.4 / 5.0

SimpleScore Allstate 4.4

Discounts 3

Coverage Options 5

Customer Satisfaction 4

Accessibility 5

Allstate makes up more than 9% of the market share in private passenger auto insurance in direct premiums written, according to the Insurance Information Institute, making it fourth of the top 10 auto insurance providers in the U.S.

But it’s the customer support, customer satisfaction and accessibility such as the user-friendly apps that got our attention, including the proprietary QuickTrip® app that helps you find the best routes and gives you daily maintenance reminders.

Consumer Report respondents didn’t care for the pricing of premiums — the company received 1 out of 5 for that item. However, Allstate fared better with satisfaction in handling of claims, with a 4 out of 5.

Best car insurance for maximizing savings – Progressive

We love Progressive because it maximizes savings for customers, with not only the usual discounts such as for paying in full and being a safe driver, but also for owning your home and having continuous insurance.

J.D. Power Rating

3/5

AM Best Rating

A+

Standard & Poor’s

AA

SimpleScore

4.2 / 5.0

SimpleScore Progressive 4.2

Discounts 4

Coverage Options 5

Customer Satisfaction 4

Accessibility 4

Unique to Progressive, the Snapshot tool bases your rate on your driving habits — like how often you drive, if you slam on the brake or if you used your phone while driving. You’ll get an automatic discount for using the Snapshot app.

This insurance provider’s insurance coverages are full of surprises, such as free pet injury coverage that pays any veterinary bills if your pets are injured in an auto accident. And in addition to the standard fare like liability, collision and comprehensive, gap insurance from Progressive covers 125% of the cost of the car if it’s totaled while you’re still making payments. 

Compare 2021 car insurance rates

Make sure when comparing car insurance quotes from different companies you are looking at the same policy type and coverage level. Cheaper quotes could just be a policy with less coverage.

How does the auto industry work?

There are projected to be almost 290 million registered vehicles in the U.S. in 2021, according to Hedges & Company, up from about 287 million in 2020. And the National Highway Traffic Safety Administration estimated there were 6.7 million vehicular accidents in 2018, the most recent available data. That’s a lot of cars and a lot of repairs to keep up with. That’s where insurance comes in.

Auto insurance helps cover car repairs and personal costs when life happens. Whether it’s an accident, pothole or car trouble, your coverage can help you cover these costs after your deductible. The less your car’s value is, the less you’re likely to pay in premiums — though it will depend heavily on your coverage, state, age and other factors. 

It’s helpful to think of the auto industry as a never-ending cycle. We pour money into cars and maintenance, but car insurance helps cover the cost if anything goes wrong.

What’s factored into auto policies and rates? 

Your auto policy and the premium will depend on a few factors. It will also determine whether or not an insurer is a good fit for your car coverage needs. Most policies depend on the following:

Depending on these and other factors, you could pay more or less in car insurance. Think about buying a brand new, high-end car when you turn 21 years old. You’re likely to pay more for the car’s year, make and model. You may also pay more as a young driver with a less established driving record. You’re also likely to pay more if you live in California than your friends in South Carolina are paying. Keep in mind that your policy and premium are unique to your needs, driving record and other personal factors.

What’s happening in the car insurance industry today?

At the start of the pandemic, some insurers offered drivers a reimbursement on their monthly payment to help economically. Policyholders were driving less due to COVID-19 nationwide lockdowns. Allstate offered their drivers a 15% Shelter in Place payback on their premiums for April, May and June. Other providers offered credits toward premiums instead. Since that point, drivers have been on the road less often. If you’re working remotely but still need auto insurance, it’s the perfect time to look into low-mileage auto insurance for extra savings or switch carriers for extra savings. You’ll only pay for the miles you drive, and you’ll still have all the coverage you need.

Guide to finding the best car insurance for you

There’s a lot to know about the car and insurance industries to fully understand how auto insurance works, but we don’t want to bore you with a long history lesson. Here’s what you need to know to help make a well-informed decision about your car insurance.

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What makes the best auto insurance companies?

The best auto insurance companies give policyholders flexibility, affordability and simplicity from beginning to end. Whether it’s getting a free quote, paying a monthly premium or filing a claim, today’s top picks are giving customers what they need when they need it most. 

Coverage options 

Start by looking at a provider’s coverage options. You’ll want an insurer with a number of policies and coverage options to meet your needs. Ask your agent what types of car insurance they offer and if any add-ons are available, including rental car coverage and Roadside Assistance. Many insurers will offer a few options including collision, personal injury and gap coverage. 

Customer service 

Switching insurance providers isn’t all about rates. Service matters just as much, if not more. After all, you’ll be working closely with an agent to handle your policy, claims and any other concerns. Take a look at your agent’s BBB rating or J.D. Power rating to see what other customers think, and to weigh any pros and cons. You can also give your agent a call for a first-hand customer service experience to ask about claims, coverage, rates and more. 

Rates 

Your auto insurance shouldn’t break the bank. Shop around for the most affordable rates by speaking with agents and getting free quotes online. Be careful when aiming for the lowest rates, though. Cheaper coverage doesn’t always mean it’s the best. You may pay a low monthly price, but the policy could lack the coverage options you need. Make a list of necessary coverages and find the most affordable rate for your needs. 

Once you’ve found a premium you’re comfortable with, give the agent a call to get more information on discounts and other ways to lower the cost. You may save money on your rate by bundling home insurance, driving safely or taking a driver’s safety course. 

Consider these factors when shopping for car insurance

Check your state requirements: not every state is the same

In nearly all states, drivers are required by law to carry some form of car insurance or proof of financial responsibility. Every state has requirements for the level of insurance and the minimum amount of coverage each driver must have. Use the Insurance Information Institute’s guide to determine the insurance requirements for your state.

After you’ve found what’s the minimum amount of insurance required for your state, you should know if you live in a no-fault or fault state. If you live in a no-fault state, regardless of if an accident is your fault, collision damages and medical expenses will be covered by your insurance company.

We’ve researched state requirements and the best carriers across all 50 states:

What is an at-fault state?

There are two kinds of state laws when it comes to establishing fault in an accident:

  • No-fault state — This means that drivers only assume responsibility for their own injuries and damages. No-fault state drivers are required to carry personal injury protection (PIP) to ensure that you have the adequate coverage to pay for medical expenses from an accident.
  • At-fault state — Also known as a tort state, this means that the person responsible for the accident pays for all of the damages associated with that accident, including the other driver’s expenses.

Choose the right amount of coverage for you: Full coverage vs minimum

Full coverage annual rates are significantly higher than minimum coverage rates. But an inclusive car insurance policy isn’t something you should opt out of just to save money— especially if there’s a collision. Full coverage pays for damages to your car caused by an accident, while the state minimum, also known as liability insurance, will cover damages you cause to other people and their car while driving.

Even though a cheaper monthly premium might seem attractive, having more than the imposed state minimum will ensure that you’ll pay less out-of-pocket in case there’s an accident.

For example, in a major car accident, an individual’s medical expenses are likely to exceed $15,000, yet that’s the minimum liability limit in some states. When shopping for liability insurance, it’s a good idea to choose a coverage that will exceed what you might need.

While different states will require different types of coverage, the most basic auto insurance policies are bodily injury liability, personal injury protection (PIP) and property damage liability. There are additional coverage options as well, which typically cover things like pet injuries or new car replacement costs, among other expenses. Some examples include:

Understand your deductible and how it affects your premium

Most coverage options will have a deductible –– the amount of money you have to pay out-of-pocket towards a covered loss before your insurance policy will step in. Collision, comprehensive and uninsured/underinsured motorist coverage will all have a deductible.

While you shouldn’t opt out of coverage options just to save money, there are times it just doesn’t make sense to have the extra coverage. A classic example is collision coverage. If your car’s value is too close to the deductible, you probably won’t get reimbursed from your insurance company after a loss.

Let’s say your car is worth $1,000 and your deductible is $1,000. If you get into an accident and your car sustains $800 worth of damage, you wouldn’t get an insurance payout because your deductible would cover the entire cost. It’s always important to determine which types of coverage make sense for you, but especially if you have an older car that’s low in value.

How to save money on car insurance

Now that we’ve laid out the most important aspects that you should know about car insurance, here are some tips on how to save money on your car insurance policy.

1. Compare car insurance quotes

Risk isn’t the only factor that car insurance companies use to calculate your rate. Many insurers also use “price optimization,” meaning they set rates based on how much customers are willing to pay.

Large insurance companies analyze an enormous amount of customers’ personal data, such as social media posts, credit scores and even your online shopping habits. Then, they run the data through a proprietary algorithm that estimates how likely you are to shop around or just renew your existing policy each year. Shopping around every year or two is the best way to avoid this practice and it will help you find the cheapest car insurance options. For most car insurance companies, getting a quote is an easy, online process that you can do in minutes. You’ll just need to provide information like your address, vehicle information and driving history.

[ For You: Understanding Auto Insurance Quotes ]

Shopping around every year or two is the best way to avoid this practice and it will help you find the cheapest car insurance options. For most car insurance companies, getting a quote is an easy, online process that you can do in minutes. You’ll just need to provide information like your address, vehicle information and driving history.

2. Raise your deductible

A higher deductible means a lower monthly cost. It’s a better budget option but know that if you get into an accident, you’ll have a steeper up-front cost to pay for the damages.

3. Raise your credit score

A good credit score saves you money on just about every monthly service or bill and car insurance is no exception. If you focus on improving your credit score first, you’ll save hundreds and thousands of dollars on your annual premium. Look for ways to improve your credit score ahead of shopping.

4. Ask for discounts

If you want a policy with a lot of additional coverage, the end price can feel a little overwhelming. Especially when you consider car insurance isn’t something you’re actively using every day. Capitalizing on the discounts providers offer is one way to ease that financial burden. When you’re shopping around, look for discounts that tailor to your needs. Here are some of the common discounts offered by most providers:

  • Defensive driving discount
  • Good driver discount
  • Low mileage discount
  • Safe driver discount
  • Multi-driver or multi-policy discount
  • Student discount

5. Bundle your insurance

Do you pay separate companies or have separate policies for your renters, home or motorcycle insurance? Renter + auto discounts and home + auto discounts are common. Ask your insurance provider if there is a chance you could be saving money each month by bundling separate insurance.

Car insurance FAQs

Non-owner car insurance policies protect you if you are in an accident that damages someone else’s car while driving it. It’s a lot cheaper than a regular car insurance policy and many of the best car insurance carriers offer this type of coverage.

The amount you pay for car insurance depends on the coverage you choose, where you live and other demographic data. We found that the average cost of car insurance for a full coverage policy is about $130 per month, while a policy that just requires the state minimum coverage is under $100. If you are paying more than the $130 monthly premium, it’s worth shopping around for other car insurance companies or asking your current insurer why your rates are so high.

Regional providers often outshine nationwide options because they have fewer customers, allowing them to dedicate more time to each policyholder. So if customer service and the availability of representatives is important to you, a regional option may be best for you.
However, because regional insurance providers have fewer customers, they also tend to have more expensive premiums and fewer discounts.

Your car insurance coverage extends to a rental car within the U.S. If you’re planning to rent a car overseas, your credit card may provide coverage. If not, you may need to buy additional insurance from the rental agency.

After an accident, regardless of if you are at fault, you need to file a claim with your car insurance company. After the claims process, you will be able to get your car fixed and still keep your current car insurance.

However, your car insurance monthly premium will likely go up after an accident. The amount depends on the type of claim or driving incident.

In most states, car insurance is required by law. Not having coverage can result in license suspension and fines. But even if your state doesn’t require car insurance, you could be left with hefty car repair fees and medical bills to cover if you’re found at fault in an accident.

Ask the Experts

  • Ben ReynoldsBen Reynolds

    Ben Reynolds

    CEO and Founder

  • John DeichlJohn Deichl

    John Deichl

    General Manager

Can a policy become more expensive over time?

Your policy could become more expensive, especially as your career or financial situation changes, your risk of an accident or auto theft could increase your insurance rates. Missing loan payments could indirectly affect your rates since it will lower your credit score and car insurance companies significantly consider credit scores when determining your rates.

Can certain jobs affect my coverage?

Specific job titles can also affect your rates since being in a profession where you could be more distracted while driving can make you a more risky driver. Every provider will analyze this differently since being on the road more could significantly impact your car insurance rates even when your occupation is perceived as more responsible. 

Can I drive for Uber/Lyft using my personal car insurance?

No. Rideshare insurance is a hybrid policy that includes coverage for personal auto use and when drivers are signed in a ridesharing app, but not covered by the company’s insurance. Drivers for on-demand delivery companies should also have rideshare insurance to avoid a coverage gap.

Do I need to compare auto insurance rates if I move out of state?

When moving out of state, you will need an entirely new policy. The new rates will be determined by many factors including the zip code. You should also check whether your new state is no-fault, meaning your insurance company would pay for your injuries and related expenses after an accident, no matter who was responsible. Also, the party at fault could still be sued for injuries over a certain threshold. No-fault states require you to have personal injury protection insurance to cover you after an accident.

How much can someone really save by comparing rates?

You can potentially save hundreds of dollars by comparing your rates. It’s recommended that you shop every two to three years to compare the rates offered by your current insurance provider with other providers to properly assess your rate. 

We welcome your feedback on this article and would love to hear about your experience with the car insurance companies we recommend. Contact us at inquiries@thesimpledollar.com with comments or questions.

If you’ve been denied coverage by private insurance companies due to past driving incidents, there are state assistance programs that can provide proper coverage and keep you safe from high bills or driving illegally. A handful of states have government-sponsored programs to help low-income families afford cheap full coverage car insurance. Hawaii, California, Maryland and New Jersey offer government-sponsored car insurance for low-income individuals. 

Usage-based car insurance (UBI) is determined based on your driving behaviors and miles driven. Powered by vehicle installed devices, plug-in devices, or even mobile apps, this type of insurance allows the carrier to monitor your driving habits and best align your premium with your actions while behind the wheel. Carriers such as Progressive and Allstate offer these programs.

If you are considered high risk to insure, it might be helpful to hire an independent insurance agent to find the best deal for you across multiple companies.

Due to the COVID-19 pandemic, many Americans are struggling to pay monthly bills. You are not alone. There are some companies offering support, delayed payments and discounts to help.

Don’t give up! There are multiple ways to get car insurance if private companies are offering high rates or don’t have a policy available. 

Source: thesimpledollar.com

What’s the Average Cost of Car Insurance in the U.S.?

When it comes to shopping around for car insurance, it can be difficult to figure out the pricing structure. Part of the issue is that the price varies significantly by where you live, the minimum coverage requirements and a number of other factors. 

Your auto policy and the premium will also depend on such factors as age; car year, make and model; driving record; and gender, which we get into more later.

The average cost of car insurance in the United States is $1,758 per year, which works out to about $146.50 per month. In Florida, the average monthly cost is 29% higher than the national average. A car insurance policy in Alaska, on the other hand, will cost you much less on average, at just $77.88 per month. Even ZIP codes in the same town can differ.

This means that your insurance premium and the premium of your friend living across town will likely be quite different.

With all those factors, how do you know what to expect when it comes to the cost of auto insurance? Well, we’ve got your back. We’ll go into how much auto insurance costs by state and by insurance provider, dive into the other factors, and talk about what you can do to save money on auto insurance.

Research Methodology

The Simple Dollar analyzed millions of car insurance rates in every U.S. ZIP code to determine the average cost by state, carrier, coverage amount, credit score, and other factors from Coverage.com. This includes analyzing thousands of rates from all 50 states that were publicly sourced from 2019 insurer filings. Rates are based on a 30-year-old male or female that had a clean driving record, and we looked at those who had both good and poor credit. These rates should be used to inform your car insurance shopping process, but your own quote may differ based on your unique driving profile.

In this article

What decides the cost of auto insurance?

Here, we’ll get into details about factors that decide the cost of your car insurance. They can be:

  • Age
  • Gender
  • Where you live
  • The car you drive
  • Your driving history
  • Education level
  • Profession
  • How long you’ve been driving
  • Your credit score
  • Your driving habits
  • The amount of coverage you choose
  • The type of coverage you choose

[Read: The Simple Guide to Car Insurance]

1. Why does where I live affect the cost of car insurance?

Car insurance rates vary dramatically by state and even ZIP code.

Let’s look at Louisiana. That state offers the most expensive rates for full coverage, with an average annual rate of $3,279.18. One of the reasons why car insurance is so expensive in Louisiana is because the state has one of the highest accident rates. The number of fatal accidents and frequency of collisions in the state is significantly higher than the national average, which leads to higher auto insurance rates.  

State car insurance rates are also determined by the number of uninsured drivers on the road. This leads Florida to be the most expensive state for minimal coverage — 26.7% of drivers don’t have car insurance. Uninsured drivers create more risk and ultimately increase the price of insurance for everyone.

Most expensive full and minimum coverage costs per state

State (Full coverage cost) Average Full Coverage Cost Average Full Coverage Monthly Cost State (Minimum coverage cost) Average Min. Coverage Cost Average Min. Coverage Monthly Cost
1. Louisiana $3,279 $273 1. Florida $1,544 $129
2. Florida $3,289 $266 2. Michigan $1,525 $127
3. Maryland $3,079 $257 3. Maryland $1,489 $124
4. Michigan $2,730 $227 4. Louisiana $1,488 $124
5. New York $2,609 $217 5. Rhode Island $1,445 $120
6. Pennsylvania $2,493 $208 6. Connecticut $1,309 $109
7. New Jersey $2,471 $206 7. New York $1,245 $104
8. California $2,417 $201 8. New Jersey $1,162 $97
9. Rhode Island $2,394 $200 9. Delaware $1,017 $85
10. Colorado $2,346 $196 10. Nevada $989 $82

Which states have the cheapest car insurance?

At an average premium of just over $300 each year, Iowa drivers pay the least amount for minimal coverage –– by a significant amount. Iowa’s low population density is one of the main reasons costs are so low. The majority of the state is made up of “dense rural” areas, rather than urban areas. With fewer drivers on the road, there is less risk of accidents overall.

Cheapest full and minimum coverage cost per state

State (Full coverage rank) Average Full Coverage Cost Average Full Coverage Monthly Cost State (Minimum Coverage rank) Average Min. Coverage Cost Average Min. Coverage Monthly Cost
1. Idaho $1,094 $91 1. Iowa $306 $26
2. Maine $1,242 $103 2. South Dakota $382 $32
3. Hawaii $1,264 $105 3. North Dakota $390 $32
4. Iowa $1,275 $106 4. Wyoming $393 $33
5. Vermont $1,366 $114 5. Nebraska $412 $34
6. Ohio $1,397 $116 6. Idaho $429 $36
7. Nebraska $1,397 $116 7. Hawaii $439 $37
8. North Carolina $1,417 $118 8. Montana $441 $37
9. North Dakota $1,419 $118 9. Ohio $462 $38
10. New Hampshire $1,487 $124 10. North Carolina $482 $40

2. What are my choices of insurance coverage and which are more expensive?

Though every state sets its own regulations, there is a minimum amount of insurance you must carry in each of the 48 states that require car insurance. (New Hampshire and Virginia don’t require insurance.) You can choose to carry higher limits, which will result in a higher premium.

What type of auto insurance coverage should I choose?

You can also choose to add collision and/or comprehensive coverage to your policy to create “full coverage.” While minimum coverage only protects you against liability claims from others, full coverage also protects your vehicle. Collision coverage, as the name suggests, protects your vehicle when it collides with another vehicle, building or other objects. Comprehensive coverage protects your vehicle in non-collision incidents, such as theft or a natural disaster. 

Not everyone needs full coverage. Here are some things to consider if full coverage is right for you:

  • Older vehicles may not need full coverage since the deductible could be higher than the value of the car.
  • Full coverage may not be worth it if you rarely drive and have little to no history of accidents.
  • If you have a lease or a car loan, check with your lender. You may be required to maintain full coverage.

Your policy limits and deductible will fine-tune your car insurance costs, whether you choose minimum or full coverage. The policy limits are how much the insurance company will pay for each type of incident. The deductible is how much you are responsible for paying before the insurance company starts to pay.

Should I choose minimum coverage vs. full coverage?

Minimum coverage car insurance differs in every state, but it usually includes: bodily injury, liability coverage and property damage liability coverage at a minimum. This is the cheapest coverage you can buy, and you can’t legally carry less than the minimum amount.

Full coverage car insurance, on the other hand, is more expensive because it offers significantly more protection. However, it’s worth the added cost. If you settle for the state’s minimum insurance requirements, you run the risk of being underinsured.

Full coverage car insurance usually includes:

You will see coverage amounts listed as three numbers separated by slashes, such as 30/50/30. These numbers represent, in order, bodily injury liability per person, bodily injury liability per accident and property damage liability per accident, in thousands of dollars. So 30/50/30 insurance covers $30,000 of bodily injury per person, $50,000 of bodily injury per accident and $30,000 of property damage per accident.

Drivers can also elect to purchase additional coverage for things like roadside assistance, rental car reimbursement and accident forgiveness.

If you get into a costly accident, there’s no guarantee that you’ll have enough coverage to pay for the full extent of the damages. In that case, you would be financially responsible for paying the difference, which would come out-of-pocket.

3. Can my credit score impact the cost of car insurance?

Your credit score can have a massive impact on your car insurance rates, regardless of other factors. Only three states — California, Hawaii and Massachusetts — ban insurers from factoring in credit score, while in many states your rates could more than double if your credit is poor.

Car insurance cost: poor credit vs. good credit

Carrier Good Credit Full Coverage Average Cost Poor Credit Full Coverage Average Cost Difference
Allstate $2,457.21 $3,528.41 $1,071.19
American Family $1,728.63 $2,897.22 $1,168.59
Farmers $1,534.08 $2,560.31 $1,026.23
Geico $1,336.58 $2,197.10 $860.52
Nationwide $1,379.07 $1,931.89 $552.82
Progressive $1,915.07 $2,976.39 $1,061.32
State Farm $1,902.69 $2,701.59 $798.90
Travelers $1,952.91 $2,635.82 $682.91
USAA $1,178.28 $3,486.49 $2,308.21
Average Difference     $1,058.96

4. Do my age and gender affect the cost of auto insurance?

In a word, yes. Even your basic demographics can have a strong impact on your car insurance costs. Most (though not all) states allow drivers to be rated based on:

  • Age: Younger drivers and those over the age of 75 generally pay more.
  • Gender: Among drivers under age 25, men typically pay more than women — this discrepancy tends to go away for more experienced drivers.
  • Marital status: Married people are considered lower risk, and thus tend to pay less for car insurance.

5. Can my type of car affect the cost of my insurance?

Which car you choose can have a surprisingly big effect on your insurance rates.

Less expensive to insure

  • Big vehicles
  • Family vehicles such as SUVs or sedans

More expensive to insure

  • Small cars
  • Sports cars, especially those that are considered high-performance

6. How can my driving history affect the cost of auto insurance?

As you might expect, insurance companies don’t particularly like paying claims. So if your driving history is poor, you can expect higher premiums. In order of costliness, some things that could raise your rates include:

7. Do auto insurance companies care about my driving habits?

Statistically, the more you drive, the more likely you are to get into an accident. Likewise, parking on the street is more likely to result in damage than parking in your own garage. To save money on car insurance, consider:

  • Taking public transportation to work
  • Reducing your commute
  • Carpooling
  • Paying for off-street parking

8. How does the car insurance company I choose affect my cost of auto insurance?

Of course, all insurance carriers are free to set their own prices. Some carriers offer discounts for which you might qualify, such as safe driving bonuses or discounts for military families, and some may rate your particular risk level lower than others. So it always pays to shop around.

As you can see below, most major car insurance providers are in the same ballpark for rates, but there are some clear outliers. You’ll get the most expensive full coverage auto insurance premium from Allstate, and the most affordable from USAA.

On the opposite end of the spectrum, Travelers offered the most expensive minimum coverage rate of $815.41, and USAA offers the cheapest rate by far – just $487.04 each year. This makes USAA seem like the obvious choice, but USAA doesn’t provide coverage to just anyone — it has strict military and immediate family restrictions.

Carrier Full Coverage Average Cost Full Coverage Monthly Cost Minimum Coverage Average Cost Minimum Coverage Monthly Cost
Allstate $2,457.21 $205 $800.53 $67
American Family $1,728.63 $144 $813.48 $68
Farmers $1,534.08 $128 $614.64 $51
Geico $1,336.58 $111 $568.88 $47
Nationwide $1,379.07 $115 $830.00 $69
Progressive $1,915.07 $160 $742.80 $62
State Farm $1,902.69 $159 $801.81 $67
Travelers $1,952.91 $163 $815.41 $68
USAA $1,178.28 $98 $487.04 $41

How can I save on car insurance?

There are a few tricks for saving on auto insurance, including lowering the amount you drive, improving your credit score, and of course, driving more safely. You can also get a host of discounts, depending on your choice in insurance provider.

To get the best deal for your circumstances, conduct a car insurance comparison.

Different insurers offer different discounts. Insurers like Geico, State Farm and Progressive are frequently recognized for having cheaper car insurance rates.

Common discounts include:

  • Good student savings
  • Certain organization membership
  • Active duty military
  • Bundling other policies with the same company
  • Driving a low-risk car
  • Infrequent driving
  • Having a good credit score

Boost your credit score

Taking the steps to improve your credit score is a powerful way to save money on your car insurance. As an added bonus, it will help reduce costs in other areas like credit card APRs. Start by paying all of your bills on time, checking your credit report for errors and keeping your credit card balances low. Remember, improving your credit score is a marathon, not a sprint. It will take some months to see your score increase.

[Read: Car Insurance Rates Are Up – Here Are Eight Ways to Get Yours Back Down]

Car insurance cost FAQs

It varies by state, but in general, you can expect to need coverage for bodily injury liability, property damage liability and uninsured/underinsured motorist protection. States like New Hampshire don’t require car insurance, though additional requirements are in place.

It depends on a few factors. You should consider the likelihood of your car being damaged (based on your area, your vehicle’s age and similar factors) and your ability to pay for repairs if damages were to occur. Also think about how often you drive. From the start, driving more will put you at a higher risk for an accident.

After an at-fault accident, you can expect to see a 42% rise in your premium, according to data from InsuranceQuotes and Quadrant Information Services. Unfortunately, these rates were measured from people with relatively clean driving histories. If you have a less-than-perfect record, you may be subject to even higher premium increases. How much your rate will increase will depend on the claim type, if you were at fault, your carrier and what state the accident took place in.

We welcome your feedback on this article and would love to hear about your experience with the car insurance we recommend. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com

5 Life Milestones that Might Affect Your Car Insurance

Whether you’re getting married, putting your teen behind the wheel for the first time, or buying your first home, a big life change can have a ripple effect on your finances.

While it might not be top of mind, one of those effects could be your car insurance. There’s a lot more that goes into calculating your rates than the standard questions about age, gender, and driving record. When you hit a major milestone in life, your new status can impact those rates in unexpected ways.

Here are five events that might trigger a change in your insurance.

1. Getting Married

Good news for honeymooners: in most cases, being married will lower your car insurance rates! Adding a partner to your insurance could spell savings for your household, especially for younger couples. It turns out that married people are less likely than single people to get into accidents. Ah, the perks of true love.

2. Buying a Home

One of the biggest milestones in life is buying your first home. While homeowners coverage is a must, becoming a homeowner might actually affect your car insurance, too.

Like married people, homeowners tend to see better rates on car insurance. Those savings could be even higher when you bundle your auto and homeowners policies with the same insurer (not to mention more convenient).

Buying a home also means that you might want to take a look at boosting your auto coverage. Look for polices that protect your assets and take care of legal costs-bodily injury, uninsured/underinsured motorist bodily injury and property damage are your best options. As you build up equity in your home, you’ll want to make sure your investment is safe, no matter what happens.

3. Adding a Teen Driver

As nervous as you may be to see your teenage child in the driver’s seat for the first time, you’ll feel better when they’re protected under your insurance policy.

Teen drivers need to be covered as soon as that driver’s license is in their hands. Your rates will probably increase, because this age group has much higher accident rates than older drivers, which makes them riskier to insure.

However, there are a few things you can do to help keep your rates low. For instance, when you add your teen to your policy, check to see if you qualify for a multi-driver discount. Likewise, if your teen has his or her own car, you could get the multi-car discount. Good students can help lighten the load as well. Many insurers offer discounts to young drivers who keep their grades up.

4. Getting Divorced

If you and your spouse are parting ways, it’s important to make sure both of you-and any dependents you might have-are still covered.

Once you’ve divvied up the cars, you and your ex will need to get separate policies. The change in circumstances makes this a good time to comparison shop, especially because you may be losing out on discounts you enjoyed as a married couple (for instance, a multi-car discount).

If you’ll be sharing custody of teen drivers, check with your insurance company to find out whether you both need to list your teen on your policy-and factor that into any quotes you get.

5. Getting a Raise

Now that you’ve got a little extra cash in your pocket (and perhaps some financial benefits, like stock), it’s time to take another look at your policy. Consider upping some of your coverages, like bodily injury and property damage, to make sure that if an accident happens, your income (and growing savings) will be protected. These policies cover medical bills as well as legal fees if someone involved decides to sue. Putting a little extra money toward your premium today can pay off big time down the road.

During a major life event, there’s a lot to think about. If you need help figuring out how to handle the big changes (insurance-wise, that is), talk to your insurer to make sure you’re adequately protected-and getting the best deal possible.

Eric Madia is Vice President of Product Design at Esurance, where he is responsible for designing the company’s personal lines products. Eric has 23 years of experience in the industry, focused primarily on underwriting, pricing, and product innovation. You can follow him on twitter @Erictheactuary.

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Why Is It Required to Have Car Insurance?

In 49 states in the United States, there is some form of compulsory insurance for motor vehicles. Many people ask, “Is car insurance required?” since it may not be immediately apparent if you see yourself as a good driver willing to pay for any potential damages to your car. The answer to “Why is car insurance mandatory?” lies in the type of car insurance. Perhaps you’re looking to why you need car insurance. There are both mandatory and optional coverages to consider.

In this article

Is car insurance mandatory in the U.S.? 

Car insurance isn’t mandatory at the federal level in the United States, though all but one of the 50 states do make some kind of coverage required.

This means that what counts as “state minimum compulsory insurance” in each state will be slightly different. These minimums are what the state considers the minimum you should purchase to cover your liability adequately.

States like Iowa, Ohio, and Wyoming have meager costs. Other states may have high premiums due to the high cost of living in the state, but the minimum coverage is lower, like New Jersey, Michigan and Florida. As a result, the minimum coverage could pay less in a costly accident.

Costs for minimum car insurance are reliant on the amount of compulsory coverage in the state and how common expensive accidents are, and the typical costs of those accidents. States like Michigan have specific laws requiring unlimited personal injury protection coverage that change how much it costs to insure a motorist.

Why do states make car insurance mandatory? 

Mandatory minimum car insurance is liability insurance, making it different from many other kinds of insurance you probably have considered purchasing. If you own a homeowner’s policy, a healthcare insurance policy, or a renter’s insurance policy, those all focus on recouping losses that you experience. You’re buying them to protect yourself or your property.

[ Read: What’s the Average Cost of Car Insurance in the U.S.? ]

However, you don’t drive your house around, potentially harming other people. Car accidents have adverse effects on other people, and liability coverage is mostly focused on the two kinds of harm you can cause if you are at fault in an accident: medical expenses and damage to the other vehicle.

It can be tempting to feel like car insurance should be optional until you consider the results if someone else runs into your car. Suppose you had a big pile of medical bills and a totaled car, all because someone without liability coverage made a careless driving choice. In that case, you probably see why mandatory minimum car insurance gives everyone a base level of protection from other drivers.

New Hampshire, the only state that doesn’t require car insurance, still has it’s own version of liability. You’re allowed to either have the insurance or be willing to pay those costs yourself if you don’t have insurance. It’s not a mandatory insurance policy, but the liability is still there, so most people opt to get coverage.

What happens if I don’t have car insurance? 

Getting pulled over when you do not have car insurance in a state with mandatory minimum car insurance is very costly. Even a first offense of driving without insurance can result in a suspended license, large fines or even having your car impounded in some states. Second offenses are more likely to lead to jail time. All instances of driving without insurance can lead to increases in your insurance premiums in the future when you apply for a policy.

[Read: Caught Driving With No Car Insurance? Here’s What It’ll Cost You ]

If you are caught driving without car insurance because you are involved in an accident, your consequences can become more severe. Rather than a small chance of a warning or a smaller fine, you are much more likely to have your car impounded, and you are likely to have your license suspended. What’s more is that at-fault drivers with no insurance become financially liable for a large variety of costs, especially if the other person in the accident carries none or very little uninsured motorist coverage. You could be forced to pay a large sum or declare bankruptcy.

You may get some reprieve because other motorists carry coverage for underinsured or uninsured motorists. Still, given the high costs of medical bills and car repair, it’s unlikely to cover everything.

How much car insurance is required?

There are a few different aspects of the minimum coverage in each state. Nearly every state will require you to carry some bodily injury liability and property damage liability coverage since those two costs tend to be present in an accident. Most mandated state minimum insurance coverage is abbreviated to a set of three numbers like 25/50/25. The first number is the maximum payout for a single person’s bodily injury in an accident. The second number is the maximum for all individuals harmed per accident. And the third number is the maximum payout for property damage.

Some states structure their minimum coverage to require personal injury protection, where each motorist files with their insurance for damages and medical expenses rather than assigning one motorist as at fault – these states are known as “no-fault states.” Other states have mandatory underinsured or uninsured motorist coverages.

State Minimum Car Insurance Requirement
Alabama 25/50/25
Alaska 50/100/25
Arizona 15/30/10
Arkansas 25/50/25
California 15/30/5
Colorado 25/50/15
Connecticut 25/50/20
Delaware 25/50/10
Florida 10/20/10
Georgia 25/50/25
Hawaii 20/40/10
Idaho  25/50/15
Illinois 25/50/20
Indiana 25/50/25
Iowa 20/40/15
Kansas 25/50/25
Kentucky 25/50/25
Louisiana 15/30/25
Maine 50/100/25
Massachusetts 20/40/5
Michigan 20/40/10
Minnesota 30/60/10
Mississippi 25/50/25
Missouri 25/50/25
Montana 25/50/20
Nebraska 25/50/25
Nevada 25/50/20
New Hampshire 25/50/25, financial responsibility only
New Jersey 15/30/5
New Mexico 25/50/10
New York 25/50/10
North Carolina 30/60/25
North Dakota 25/50/25
Ohio 25/50/25
Oklahoma 25/50/25
Oregon 25/50/20
Pennsylvania 15/30/5
Rhode Island 25/50/25
South Carolina 25/50/25
South Dakota 25/50/25
Tennessee 25/50/15
Texas 30/60/25
Utah 25/65/15
Vermont 25/50/20
Virginia 25/50/20
Washington 25/50/10
Washington D.C.  25/50/10
West Virginia 25/50/25
Wisconsin 25/50/10
Wyoming 25/50/20

Source: Insurance Information Institute

We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com

Can I Transfer My Car Insurance When Moving Out of State?

If you’re planning a move across state lines, you’ve likely wondered about updating your car registration and insurance. So what do you do with your car insurance when moving out of state? Do you have to change car insurance when you move states? The short answer is yes — but you may not have to completely overhaul your policy to pull it off. In all cases, your policy will need to be updated — at the very least.

Although it’s possible to transfer car insurance from one state to another, you will need a new policy if your carrier does not offer car insurance in the state you’re moving to. So, not only do you need to update your carrier with your new address, you also need to make sure your new policy meets the minimum requirements for the state you’re moving to. Otherwise, you could end up with coverage that doesn’t meet your needs, and that could cause big problems down the road. Here’s what you need to know.

In this article

Your car insurance grace period 

In most cases, your current car insurance coverage will continue to cover you until your policy renewal date, even when you move out of state. But rather than waiting until you’ve unpacked all the boxes in your new place, the best recourse is to notify your insurance company of your move as soon as your new address is confirmed. This gives you time to work with your agent to get your policy updated or purchase a new one altogether if your current carrier does not provide coverage in your new state.

[ Next: Liability vs. Full Coverage Car Insurance ]

The last thing you want to do is let your old policy lapse or cancel before you have your new policy in place. Not only is driving without liability insurance illegal in almost every state, but you also open yourself up to a huge financial risk if you’re involved in an accident without insurance.

Updating your insurance becomes even more critical when it comes time to register your car in your new location. You should also be aware that it’s considered a form of insurance fraud to misrepresent the location you live in, so your best bet is to update your new address right away with your insurance carrier to avoid any issues.

Changing your policy after a move 

Once you move out of state, you need to start the process of updating your car insurance. There are two different possible scenarios that can occur when you do this.

The first is if your current auto insurance provider extends coverage in the new state you’re moving to. If this is the case, contact your agent and notify them once your new address is confirmed. Your agent should be able to easily update your policy to reflect your new location and new policy.

If your current carrier does not offer coverage in your new state, you will need to purchase a new policy. Whatever you do, do not cancel the coverage on your existing policy until your new carrier’s policy is put in place.

Whether or not you stay with your current provider, moving is an ideal time to receive multiple quote comparisons. This way you know you’re receiving the most competitive price for the coverage you need. And remember, your insurance rates are based on where you live, among many other factors, so changing states will likely impact your rates.

[ For You: How Much Car Insurance Do You Need? ]

For example, if you’re moving from North Carolina, where the average cost of auto insurance each month is $79.13, you may be surprised by an increase if you move to another state like Georgia. Georgia’s average rate each month is $131.15, further illustrating the need to get quotes from multiple providers.

Registering your car after a move

Another reason you have to change car insurance when you move to another state is that most states require you to show updated insurance coverage for the car registration process. And, the requirement in most states is that you register your car within 90 days of moving, which means your auto insurance needs to be updated quickly.

It’s important to keep in mind, though, that the grace period for updating car registrations varies state to state, so don’t assume that you’ll have 90 days to do so. For instance, Texas requires you to register within 30 days and Michigan requires you to immediately register your vehicle after you move. If you do not register within the designated time frame, you risk fines and possible citations.

The cost of registering your car varies by state too. Some states charge a flat fee for registration, while others charge a fee based on the weight of your vehicle. Using Texas as an example, the registration fee is $50.75 per vehicle.

The safest bet is to look up your new state’s Department of Motor Vehicles to confirm the registration deadline and required documents (including insurance coverage), along with the testing required to secure your registration. You can also get a confirmation of expected registration fees by doing this.

Tips for moving out of state 

Moving, especially across state lines, means there are plenty of details to keep track of along the way. Adequate auto insurance coverage is extremely important, and there are a few steps you can take to lessen your chances of any missteps, including:

  • Update your agent on your new address as soon as you confirm it. Your agent can advise on getting your policy updated in your new state and tell you any next steps, since most agents are only licensed in the state they live in.
  • If you must purchase a new policy, do not cancel your current policy until the new policy is in place.
  • Prior to moving, you should confirm the registration information with your new state so you are aware of any grace period or deadlines for car registration. 
  • Once your new policy is in place, you can work with your old agent on the steps to cancel the old policy.
  • Be sure your old insurance company has your new address on file in case you are due a refund and the carrier needs to send you a check. 
  • When you have your updated or new policy with in-state coverage, you can proceed with car registration.

[ See: Why Is It Required to Have Car Insurance? ]

We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com

Does Car insurance Cover Flood Damage?

Flood damage is no fun at all, especially when it comes to your car. But you have car insurance, so the damage should be covered, right? Well, it’s not quite that simple. Flooding isn’t one of the most common issues that car owners face, so it’s not necessarily included in every car insurance policy. Don’t worry; you have options, and we’re here to help. Ahead, we’ll discuss what kind of car insurance you’ll need to cover floods and how to file a claim for a flooded car.

In this article

Does car insurance cover floods?

In short: possibly. If you have comprehensive insurance, your car should be covered for flood damage. If your car is leased or financed, you should have comprehensive insurance already, as it’s required on a car that’s still being paid for. If you aren’t making payments on your car, you might still consider comprehensive car insurance, especially if you live in a state prone to flooding, like those on the coasts, in the flat Midwest, or anywhere near water.

Flooding can cause serious damage to your car. Some of the most common problems with flooded cars are down to the electrical system inside the car, but it will damage just about everything, both under the hood and inside your car. Flood water will even wreck your interior, so if you’re worried about flooding, get that comprehensive insurance so you’re covered.

[ Read: The Best Cheap Car Insurance for College Students ]

Tips for filing your flood damage auto insurance claim

Take plenty of pictures 

The most important thing you can do if you have flood damage is to document it. Take pictures of every single angle of your car and every place that’s damaged. Take close-ups, wide shots, interior pictures, under-the-hood pictures and everything else you can think of. These should be pretty easy to take on your phone, just make sure you don’t lose track of them. Back the photos up on the cloud or your computer, just in case.

File early 

File a claim on your damaged car immediately. You’ll want to contact your insurance company as soon as is safely possible, depending on what you’re dealing with flood-wise. Get in touch and let them know the situation with the flood and how much damage you’re dealing with with your car. You already have your pictures handy, which will help back up your story. But the sooner you file your claim, the sooner the insurance company can start processing it and help you.

Check for hidden damage 

You may not be able to see all the damage under the hood right away. If your car is driveable, you might take it to the local body shop to have a professional look for further damage. If it’s not driveable, see if you can have a mechanic come to your house and look for further damage. Do this early so you can include it in your claim.

[ Read: The Coolest Car Insurance Mobile Apps ]

What to do if a flood totals your car 

If the insurance company determines that the cost to fix your car is more than the car is worth, they might consider it totaled. The damage doesn’t even have to be considered 100 percent totaled, depending on what state you live in. In some states, 75% of the value is enough to be considered totaled. An insurance company may also total your car if it’s determined that it’s simply not safe to fix it and drive again. If this is the case, the insurance company will pay out what you’re owed, depending on the car’s value and your insurance policy. Be prepared here, though, to have your own information backing up the value of the car, as your insurance company might rely on you to have this information or might not come back with a value that you agree with.

If your car is not totaled in a flood 

If your car is damaged in a flood and the insurance agency determines that it can be fixed, you’ll first have to cover the deductible, whatever it is on your policy. The insurance company will cover the cost of the damage after that, but be prepared for this process to not be quick. There is a lot of paperwork and planning in this process to ensure the repairs are made in a way that the insurance company allows. Also, most likely if your car was damaged in a flood, others in your area were as well, which means the insurance companies are busy with claims, and the mechanics and autobody shops in your area are busy with repairs.

[ Read: When Should You Downgrade Your Car Insurance? ] 

How to prevent and prepare for auto damages in a flood

  • Get comprehensive car insurance: The first and most important thing to do is make sure you have comprehensive car insurance. This car flood insurance is the key to your protection.
  • Park your car on higher ground: If you know a storm is coming, move your car to higher ground if possible. This way it’s less likely to get caught in a flood.
  • Seal the doors and windows: Not that this will save you in a total flood, but make sure the doors and windows are properly sealed, as it can help keep some of the water out.
  • Avoid puddles: If you’re driving while it’s raining and starting to flood, avoid driving through puddles or standing water. For one, these are obvious pools of water, which can breach your car. For two, you don’t actually know how much water might be in that puddle, and it could flood your car.

We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com

What Is FR-44 Insurance?

Actions have consequences — particularly when you’re behind the wheel.

Causing a little fender-bender will probably leave you with nothing more than an insurance headache, but more serious offenses come with heftier repercussions. Specifically, if you’re caught driving with a suspended license or you get cited with a DUI, you might be court-ordered to have a specific document filed on your behalf.

In most states, this is called an SR-22. It’s a document your insurance provider files with the state proving that you have enough liability coverage to mitigate the high risk you present out on the road. But if you commit a serious driving offense in Florida or Virginia, you might be required to show a different certificate of financial responsibility (CFR) called an FR-44.

What is FR-44 insurance? And how do you get it if you’re required by your state to do so? Floridians and Virginians need to know.

In this article

What is FR-44 insurance? 

FR-44 insurance isn’t a separate insurance policy or a type of coverage. Instead, it’s a document that gets filed with your state proving you have enough liability coverage. Your insurance provider files it on your behalf, showing your state’s driving authority that you have sufficient amounts of the required liability insurance.

As a quick auto insurance refresher, liability coverage steps in if you cause damage on the road. Most states require two types of liability insurance: coverage to pay for any injuries you cause and coverage to pay for property damage.

When you need an FR-44, you’re required to have more of both types of liability coverage than other drivers in your state. It’s your state’s way of making sure you’re not a huge risk when they let you back behind the wheel. With a filed FR-44, you prove that you have enough insurance to protect others.

[ See: How Much Car Insurance Do You Need? ]

All this isn’t to say that Virginia and Florida don’t have SR-22s. They do — but they use FR-44s for their highest-risk drivers. FR-44s have higher liability coverage requirements than SR-22s.

Who needs FR-44 insurance and why?

When you live in Florida or Virginia, you could be required to get an FR-44 if you commit a major driving violation like:

  • A DWI/DUI
  • Driving without insurance
  • Driving with a suspended license

You might find out you need an FR-44 while in court for a hearing about your driving violation. Alternatively, you could get a letter mailed to your house indicating that you now need FR-44 insurance.

Long story short, if you majorly messed up behind the wheel, keep an eye out. Odds are, you’ll be required to carry more liability insurance. And if you do need an FR-44, don’t wait. Talk to your insurance provider right away.

Most insurance providers offer FR-44s. But if yours doesn’t, you’ll need to switch to one that does. Make sure you get enough liability coverage to meet the now-required limits (more on that later) and that your new insurer will file the FR-44 for you ASAP.

What if I don’t own a car? 

If you committed your violation while driving someone else’s car or you sold your car after the fact, you might be stumped by an FR-44 insurance requirement.

[ More: How Are Car Insurance Costs Determined? ]

In this case, your best bet is to get non-owner car insurance. This is liability coverage designed to cover your risk if you drive someone else’s vehicle and while doing so, cause property damage or injure someone.

Getting an FR-44 with non-owner car insurance can be tricky. Not all insurers offer non-owner car insurance, and not all insurers file FR-44s. You can use our list of the best non-owner car insurance to start exploring your options.

On a positive note, FR-44 insurance for non-owners is generally a lot more affordable than standard car insurance policies for FR-44 drivers.

How much does FR-44 insurance cost? 

There’s good news and bad news here.

The good news is that the actual FR-44 is very affordable. Generally, you’ll pay a flat fee of $15 to $25 for your insurer to file the FR-44 for you.

The bad news is that once you require an FR-44, you’ll be seen by all insurers as a high-risk driver. And that means more expensive car insurance.

The exact amount you’ll pay will depend on your overall driving history, the vehicle you drive, your annual mileage and more. But generally, if you need an FR-44, you can expect to pay twice as much (or more, even) than the average driver because of your history of serious driving violations. For example, we’ve found that drivers with a DUI will see a 79% rate increase, on average, once their insurer learns of the violation.

Ultimately, if you need an FR-44, expect to pay significantly more for your auto insurance than your neighbors.

[ For You: Auto Insurance Quotes, Explained ]

Does FR-44 insurance require more coverage? 

Yes. In fact, that’s the whole point of an FR-44.

Here are the minimum coverages needed for an FR-44:

  • FR-44 insurance Florida requirements: $100,000 of bodily injury liability coverage per person, $300,000 of bodily injury liability coverage per accident and $50,000 of property damage liability coverage
  • FR-44 insurance Virginia requirements: $50,000 of bodily injury liability coverage per person, $100,000 of bodily injury liability coverage per accident and $40,000 of property damage liability coverage

These limits are steep. Compare them against what all Florida drivers need: just $10,000 of bodily injury coverage (called personal injury protection [PIP] in this case) and $10,000 of property damage liability coverage.

Even more staggeringly, you can compare these limits against SR-22 requirements in Virginia. Virginians who need an FR-44 are required to carry twice as much liability coverage as Virginians who need an SR-22.

FR-44 insurance vs. SR-22 insurance

FR-44s and SR-22s are the same in many key ways: they’re both certificates of financial responsibility. They’re both state-required after a serious driving offense. They both get filed by your insurer to prove that you’ve purchased enough liability coverage to meet the extra liability limits to which you’re now subject.

But there are some major differences, too. For starters, every state uses SR-22s, while you’ll only find FR-44 insurance in Florida and Virginia. More importantly, FR-44s come with much higher liability coverage requirements than SR-22s.

We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com

These States Do Not Require Car Insurance

Is it illegal to drive without insurance? Answer: it depends.

Car insurance is legally required in most states. It is an expected, predictable monthly expense for most drivers that helps prevent financial ruin in an accident. Luckily, depending on what type of policy you have, you’ll be covered whether you are found to be at fault or are the victim of a careless driver.

However, despite all of the benefits of car insurance, it is legal in some states not to have it.

Is this safe? Are drivers using alternatives? Let’s talk about it.

In this article

What states don’t require car insurance and why?

Out of all the 50 states, two states do not require auto insurance. The states that don’t require car insurance are New Hampshire and Virginia.

In Virginia, if you choose to not have car insurance, there is a fee of $500. Ironically, the fee is actually more than the average cost of liability most drivers pay in this state (currently, Virginia drivers pay an average of $469 for minimum coverage). It should be noted, however, that the $500 doesn’t get the driver anything in return and must be paid yearly for each vehicle the driver owns. The $500 is a fine, straight and simple. Should a driver choose to pay the $500 fine instead of purchasing car insurance and be found at fault in an accident, he or she will still be expected to pay for any damages inflicted. Even though it has a car insurance ‘loophole,’ Virginia is a tort state. Drivers responsible for auto accidents must give the affected party compensation for any medical injuries and property damage inflicted.

In New Hampshire, there isn’t a fee for not having car insurance, but if you get into an accident, you’re still required to pay for any damages you cause because it, too, is a tort state. The state average in New Hampshire is currently only $425.84 for minimum coverage.

If you do decide to purchase insurance in either state, New Hampshire requires you to have a 25/50/25 policy, whereas Virginia requires a 25/50/20 policy. This means that should you be found at fault in an accident, your insurance provider must cover up to:

  • $25,000 per person for bodily injury or death
  • $50,000 per accident for bodily injury or death
  • $25,000/ $20,000 for property damage

You must pay any damages that exceed your policy limits out of pocket. If you cannot pay, both your license and car registration will be suspended in both states.

What options do I have in these states?

In Virginia, you also have the option to purchase a bond or deposit cash with the state instead of purchasing car insurance. If you do this, you are essentially proving financial stability to your state. In fact, you can do this with a number of other states as well. All of the following states that allow bonds or cash deposits in lieu of car insurance include:

  • Alabama
  • Arizona
  • California
  • Colorado
  • Delaware
  • Idaho
  • Indiana
  • Iowa
  • Louisiana
  • Maine
  • Maryland
  • Massachusetts
  • Mississippi
  • Missouri
  • Montana
  • Nebraska
  • New Mexico
  • New York
  • North Carolina
  • Ohio
  • Oklahoma
  • Rhode Island
  • South Carolina
  • South Dakota
  • Tennessee
  • Texas
  • Utah
  • Vermont
  • Virginia
  • Washington

Each state has its own bond or cash deposit requirement, but all are quite significant. In Virginia it’s $50,000, and in many states it’s considerably more (Utah, for example, requires a bond or cash deposit of $160,000).

The bond or cash deposit is used in the event that you cause an accident. Any amount paid to an injured party must be immediately repaid with interest back to the state.

There are obviously many differences between bonds and car insurance. One of the more interesting ones, however, is that the bond applies to you and not your car. This means you can drive any car you want with a bond and not worry about whether or not you are covered.

If you live in one of these states, what’s your best option?

Choosing to not have insurance in Virginia and New Hampshire (or any of the above bond states) is an unnecessary risk. The prices for medical treatment, court fees, and new cars are only going to continue to rise year after year. Though you may have a sizable bank account, you could very easily lose everything after a single accident.

If we don’t even consider the costs for medical treatment, consider a new car’s cost. These days, many new cars cost between $30-$50k, which is likely more than enough to wipe out any bond or cash deposit with your state (if not your entire savings account).

Next, consider the cost of car insurance compared to how much $50,000 could grow when properly invested. $50,000 invested for ten years with a 6% return rate would grow to $89,542.38. The U.S. average for minimum liability is only $611.12 a year. Assuming it stays at about the same amount, ten years’ worth of payments would equal $6,111.20 — far less than the $39,542.38 profit you would make if you invested your money instead of purchasing a bond
[ Read: How Much Car Insurance Do I Need? ]

We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com