How To
How does auto insurance work in the USA?
In a country as large as the United States, and even if you are in a particularly well-served area, the car is an imponderable. But once there and your vehicle has been purchased, driving without insurance is out of the question. How does car insurance work in the United States? Prices, permits, vehicle registration documents, products, history… We cover everything here.
Car insurance: which license to present to your future insurer?
First of all, we need to clarify one thing: you cannot drive in the United States with your foreign license. Do not make the mistake of driving with it, because the US policy will then consider you without a license! Do not make the mistake of presenting a foreign license to an insurance company: it will refuse you any contract. You need :
• An international license (to be collected in your native country before leaving from your prefecture, sub-prefecture or town hall), but valid on US territory only for a period of 3 months. Therefore, this permit will be especially useful for renting a car. Indeed, many insurers are quite reluctant with drivers with this license.
• Either a Florida license that you can however obtain at the DMV (Department of Motor Vehicles) center in your county. By doing it this way, and doing it as soon as possible upon your arrival, you will be able to take out car insurance for your brand new car.
With or without driver history?
Arriving in the United States without a car insurance history, you will be offered a new driver contract. And this, even if you have 15 to 20 years of driving behind and thousands of kilometres driven. In this specific case, your monthly payments will be higher.
On the other hand, before leaving, we recommend that you contact the company that insured your car in your native country and ask them for an English version of your driver-insured history.
By doing this, you will get into the “good graces” of some US companies who will then no longer consider you a new driver. The monthly payments that will be offered to you will be lower.
The 3 typical products of insurance companies
Most of the time, insurance companies will offer you 3 typical products for your vehicle and yourself. 4 guarantees are also advanced, as we will see here.
Basic coverage
As a general rule, the basic coverage offered by insurance companies does not cover all 4 guarantees. Only three: namely material damage caused to third parties, bodily damage caused to third parties or even damage caused by an uninsured driver or when the driver is hit and run.
standard coverage
The standard coverage is an improved version of the basic because it includes all three guarantees mentioned above, but with coverage 2 to 5 times higher. It also offers an ultimate guarantee: bodily damage caused to the driver or his passengers is also covered.
Improved coverage
The improved or premium cover, depending on the establishments, obviously includes all of the 4 guarantees mentioned above, but with a much higher cover. For example, we are talking about $100,000 to $300,000 for third-party damage coverage or $50,000 for property damage.
Average car insurance rates in the USA in 2014
To see even more clearly on the car insurance market in the USA today and what it has in store for you, we relay this study carried out by ValuePenguin, an American company specializing in insurance and data which surround. Here you will find, state by state, from Alabama to Wyoming, the average price, both monthly and yearly, of auto insurance for a car.
Translation
To help you make your choice on your future insurance product and understand what the guarantees that you will be offered include, here is their translation:
• Material damage caused to third parties = Property Damage Liability.
• Bodily damage caused to third parties = Bodily damage Liability.
• Bodily damage caused to the driver or his passengers = Medical Payments.
• Damage caused by an uninsured or hit-and-run driver = Uninsured Motorist Bodily damage Liability.
| STATE | Monthly Car Insurance Rate | Annual Car Insurance Rate |
|---|---|---|
| Alabama | $127 | $1,529 |
| Alaska | $134 | $1,605 |
| Arizona | $102 | $1,222 |
| Arkansas | $117 | $1,399 |
| California | $164 | $1,962 |
| Colorado | $130 | $1,558 |
| Connecticut | $137 | $1,638 |
| Delaware | $132 | $1,580 |
| Florida | $153 | $1,830 |
| georgia | $183 | $2,201 |
| Hawaii | $117 | $1,400 |
| Idaho | $88 | $1,053 |
| Illinois | $114 | $1,370 |
| Indiana | $100 | $1,202 |
| Iowa | $88 | $1,058 |
| Kansas | $113 | $1,358 |
| Kentucky | $125 | $1,503 |
| louisiana | $164 | $1,971 |
| Maine | $80 | $1,964 |
| Maryland | $151 | $1,810 |
| Massachusetts | $134 | $1,604 |
| Michigan | $213 | $2,551 |
| Minnesota | $113 | $1,360 |
| Mississippi | $115 | $1,385 |
| Missouri | $101 | $1,207 |
| Montana | $168 | $2,013 |
| Nebraska | $110 | $1,317 |
| Nevada | $116 | $1,388 |
| New Hampshire | $82 | $983 |
| New Jersey | $159 | $1,905 |
| New Mexico | $114 | $1,371 |
| New York | $98 | $1,173 |
| North Carolina | $88 | $1,060 |
| north dakota | $143 | $1,710 |
| Ohio | $77 | $1,926 |
| Oklahoma | $111 | $1,333 |
| pennsylvania | $120 | $1,440 |
| Rhode Island | $168 | $2,020 |
| south carolina | $110 | $1,316 |
| south dakota | $130 | $1,557 |
| Tennessee | $116 | $1,397 |
| Texas | $135 | $1,620 |
| Utah | $99 | $1,192 |
| Vermont | $96 | $1,149 |
| Virginia | $93 | $1,114 |
| Washington | $125 | $1,499 |
| Washington, D.C. | $177 | $2,127 |
| West Virginia | $210 | $2,518 |
| Wisconsin | $91 | $1,087 |
| Wyoming | $128 | $1,541 |
If we observe disparities between states in terms of prices , it is because of several factors: local statistics (accidents and car thefts in particular), traffic density, population density or even the speed limit of the state (it is not the same in all states).
Car bought from a private individual or a professional: how to insure yourself?
Buying a used car privately
This is often the right plan when you arrive in the United States and you have already incurred many expenses. This way, you can equip yourself for $2000 minimum, but you won’t have a first choice! Still, by choosing this option, you also take risks. Why ? Firstly because you are not sure if the car is insurable . To have a clear mind, it is strongly recommended (once the two parties have agreed on the price) to visit your future insurer, accompanied by the owner. You will then be told whether the gray card or “title” is clean or not. If so, then you can insure it.
Buy from a dealership or “car dealer”
You cannot buy a car from a car dealer if you are not insured. From there, you have two solutions. The first, a little eccentric, consists of taking out basic insurance for just a few days, in order to go and buy your car. You will then have all the freedom to choose the establishment that gives you the best offer. Especially since by buying from a car dealer, you will (normally) not have a car registration problem. You won’t get any if the car is new.
The ultimate solution is to present the “identity” of the vehicle you want to buy to an insurance company and obtain consent to present to your car dealer. The identity having been checked before the purchase when the car is yours, your insurer will then only have to ask you to take out the credit card.
