Car insurance in the USA: which coverage to choose?
Moving from the Russian Federation to the United States can cause some confusion about auto insurance. Instead of simply choosing MTPL or CASCO, we are faced with a complex multi-level insurance system. Let's be clear about this.
Let's look at an example for the state of Washington. Although there may be some differences from state to state and from insurance company to insurance company, the essence will remain the same.
Auto insurance in the US consists of several items, detailed below.
1. Bodily Injury & Property Damage Liability coverage (Bodily Injury & Property Damage Liability) - analogous to MTPL.
Here you need to choose the amount of insurance that the company will pay if you are at fault in an accident and injure a person or damage their property, such as a car or fence.
The coverage is divided into three components: a per person payout, a per all injured person payout, and a property damage payout.
For example, you can choose $25,000 / $50,000 / $25,000.
The first two numbers refer to bodily injury and the third number refers to property damage.
This means that, for example, if you injure one person and the total amount of treatment is $25,000, the insurance company will fully cover that amount. If you have two people injured and the cost of treatment for each is $30,000, the insurance company will pay $25,000 each. But if, for example, three people are injured and each person needs $20,000 worth of treatment, even though this is less than the single person limit, the maximum limit will be exceeded and the insurance company will only pay $50,000, leaving you to pay the remaining $10,000.
As for property damage, it's simple - if you, for example, crash into someone else's car or damage a road sign, repairs will be covered up to the amount you choose.
To decide on the first two figures, it is worth considering that the approximate cost of one day of hospitalization in the United States is about $20,000. And to choose the third figure, you can imagine that the value of an old car is about $10,000 and a new one is $40,000. You should also keep in mind that you can damage multiple cars at once.
2. Underinsured Motorist (Underinsured Motorist) coverage for medical expenses when an uninsured driver is involved.
Why is it needed? Primarily to get money from your insurance company quickly. Of course, the uninsured driver is still responsible, but their income may not be enough to cover your medical expenses and you will end up having to sue and get a small settlement.
There are also two components here: a per-person payout and a payout for all injured people. That is, if you had passengers in the car, they will receive a payout up to the total limit.
3. Underinsured Motorist Property Damage coverage (Underinsured Motorist Property Damage).
Here, in addition to the amount of damage coverage, the concept of deductible is introduced. Deductible is the amount you pay out of your own pocket first, and then the insurance company covers the rest. For example, if your bumper was damaged by an uninsured driver and the cost of repair was $500 and the deductible is $100, the insurance company will pay you $400. The hit & run deductible would be the same, but for if the driver fled the scene of the accident. That is, if the person responsible for the hit & run left, the insurance company will pay $200 to repair the bumper.
In this case, choosing the amount of coverage is quite simple - focus on the value of your car.
4. Disability Insurance (Personal Injury Protection).
This is a fairly complex system, but it can be said that it allows you to receive compensation if, as a result of an accident, you are unable to work and lose income.
5. Comprehensive insurance will provide coverage for damage to your vehicle caused by fire, theft, vandalism, hail, flood or collision with an animal.
The choice is limited only by the size of the deductible. The lower the deductible, the higher the cost of insurance. It is also possible to choose a broken glass deductible, which will allow you to replace broken glass for free or for $50.
6. Collision insurance will provide coverage for damage to your car as a result of an accident.
Selecting a deductible is also required here; the rest of the costs are covered by the insurance. For example, if a $500 deductible is selected and you are at fault in an accident, if you repair someone else's car for $3000 and your own car requires $5000 worth of repairs, the insurance will reimburse you $4500 to repair your car and the damage to the other car will be fully covered by the insurance company as per clause 1. Comprehensive and Collision insurances provide a kind of hull insurance policy, providing protection for your car against any kind of damage, regardless of culpability. This, which is reflected in the American bilateral insurance system.
This kind of insurance does not make sense for cheap cars. However, in case you buy a car on credit, this type of insurance often becomes mandatory.
Insurance can also include protection for a rental car if you need to replace yours during repairs. As well as loan repayment assistance in case of total loss of the car, emergency driving (towing, gasoline pickup and other situations on the road), as well as separate insurance for installed aftermarket units.
Consider Progressive and Geico insurance companies. They have excellent terms and conditions and always honor payouts. Beware of buying insurance from an unknown brand based on an Instagram ad for $30 a month if you really want reliable coverage.
Recommendations:
Let's look at an example for the state of Washington. Although there may be some differences from state to state and from insurance company to insurance company, the essence will remain the same.
Auto insurance in the US consists of several items, detailed below.
1. Bodily Injury & Property Damage Liability coverage (Bodily Injury & Property Damage Liability) - analogous to MTPL.
Here you need to choose the amount of insurance that the company will pay if you are at fault in an accident and injure a person or damage their property, such as a car or fence.
The coverage is divided into three components: a per person payout, a per all injured person payout, and a property damage payout.
For example, you can choose $25,000 / $50,000 / $25,000.
The first two numbers refer to bodily injury and the third number refers to property damage.
This means that, for example, if you injure one person and the total amount of treatment is $25,000, the insurance company will fully cover that amount. If you have two people injured and the cost of treatment for each is $30,000, the insurance company will pay $25,000 each. But if, for example, three people are injured and each person needs $20,000 worth of treatment, even though this is less than the single person limit, the maximum limit will be exceeded and the insurance company will only pay $50,000, leaving you to pay the remaining $10,000.
As for property damage, it's simple - if you, for example, crash into someone else's car or damage a road sign, repairs will be covered up to the amount you choose.
To decide on the first two figures, it is worth considering that the approximate cost of one day of hospitalization in the United States is about $20,000. And to choose the third figure, you can imagine that the value of an old car is about $10,000 and a new one is $40,000. You should also keep in mind that you can damage multiple cars at once.
2. Underinsured Motorist (Underinsured Motorist) coverage for medical expenses when an uninsured driver is involved.
Why is it needed? Primarily to get money from your insurance company quickly. Of course, the uninsured driver is still responsible, but their income may not be enough to cover your medical expenses and you will end up having to sue and get a small settlement.
There are also two components here: a per-person payout and a payout for all injured people. That is, if you had passengers in the car, they will receive a payout up to the total limit.
3. Underinsured Motorist Property Damage coverage (Underinsured Motorist Property Damage).
Here, in addition to the amount of damage coverage, the concept of deductible is introduced. Deductible is the amount you pay out of your own pocket first, and then the insurance company covers the rest. For example, if your bumper was damaged by an uninsured driver and the cost of repair was $500 and the deductible is $100, the insurance company will pay you $400. The hit & run deductible would be the same, but for if the driver fled the scene of the accident. That is, if the person responsible for the hit & run left, the insurance company will pay $200 to repair the bumper.
In this case, choosing the amount of coverage is quite simple - focus on the value of your car.
4. Disability Insurance (Personal Injury Protection).
This is a fairly complex system, but it can be said that it allows you to receive compensation if, as a result of an accident, you are unable to work and lose income.
5. Comprehensive insurance will provide coverage for damage to your vehicle caused by fire, theft, vandalism, hail, flood or collision with an animal.
The choice is limited only by the size of the deductible. The lower the deductible, the higher the cost of insurance. It is also possible to choose a broken glass deductible, which will allow you to replace broken glass for free or for $50.
6. Collision insurance will provide coverage for damage to your car as a result of an accident.
Selecting a deductible is also required here; the rest of the costs are covered by the insurance. For example, if a $500 deductible is selected and you are at fault in an accident, if you repair someone else's car for $3000 and your own car requires $5000 worth of repairs, the insurance will reimburse you $4500 to repair your car and the damage to the other car will be fully covered by the insurance company as per clause 1. Comprehensive and Collision insurances provide a kind of hull insurance policy, providing protection for your car against any kind of damage, regardless of culpability. This, which is reflected in the American bilateral insurance system.
This kind of insurance does not make sense for cheap cars. However, in case you buy a car on credit, this type of insurance often becomes mandatory.
Insurance can also include protection for a rental car if you need to replace yours during repairs. As well as loan repayment assistance in case of total loss of the car, emergency driving (towing, gasoline pickup and other situations on the road), as well as separate insurance for installed aftermarket units.
Consider Progressive and Geico insurance companies. They have excellent terms and conditions and always honor payouts. Beware of buying insurance from an unknown brand based on an Instagram ad for $30 a month if you really want reliable coverage.
Recommendations:
- Before buying insurance, make online inquiries with two to three companies and compare costs.
- If you can, pay for insurance 6 months in advance at once, this will save 10-15% of the cost.
- It is more profitable to get home and car insurance from the same company. In this case, the company will provide almost free home insurance due to a comprehensive discount.
- Take out your own insurance online, it will always be cheaper than through an agent.
- You don't have to wait until the end of the insurance policy to make changes. You can change coverage amounts, add or replace a vehicle, change your address, etc. at any time. The changes will be made the same day. The cost will be recalculated, if the insurance is cheaper, you will be refunded part of the money, if it is more expensive, you will have to pay extra.