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Independent Guide to Auto Insurance – How to Maximize Your Coverage & Minimize Costs

Car insurance is critical for those who own a car since most states require auto owners maintain a certain level of coverage.

For those who have a newer car with an outstanding loan, additional protection above and beyond the state mandatory minimums is often required by the lender.

Most drivers don’t realize this, but the average person will spend over $100,000 during their lifetime on auto policies.

If you are held to be partially or fully responsible for a collision, you may have to pay out of pocket for the other parties’ medical bills, as well as their car repairs.

Without proper coverage, the consequences of a car crash can be financially catastrophic, and in the case of a serious accident, those costs can skyrocket quickly.

Nevada, Delaware, New York, Georgia, and Michigan having the highest increase in premiums. Note: Illustrated above are the states with the highest increase in premiums year over year. The trend is expected to continue. As you age, you’re less risky, so your premium costs decrease. However, your average median price for a premium will increase approximately 4% each year.

Minimum Coverage in Most States is Not Sufficient

Although state laws can serve as a minimum guideline for the kind of auto insurance you should buy, you may want to increase your coverage.

The state minimum amount may not be sufficient in case of an accident.

Types of Coverage

There are a number of different types of coverage.

A car insurance policy is made up of several types of coverage bundled together.

By selecting the options that work for you, you can help minimize your premiums while staying protected.

Below I have provide an example of typical vehicle with the breakdown of each coverage within a policy.

CoverageLimits / DeductiblesToyota Camry 6 Month Premium
Bodily Injury Liablity$300,000 / $300,000$85
Property Damage Liability$100,000$56
Personal Injury Protection$10,000$72
Uninsured Motorist Protection$300,000 / $300,000$29
Medical Payments$10,000$2
Comprehensive$250 Ded.$29
Collision$250 Ded.$102
Total$375.00

As you can see the bulk of the policy is bodily injury, property damage, personal injury protection, and collision coverage.

Your policy is going to be broken down differently.

Plus the costs will be different than what I have illustrated above. 

Bodily Injury & Property Damage Liability

Liability is coverage that is most commonly mandated by the state.

Liability coverage combines two types of protection, bodily injury liability and property damage coverage.

The former pays out for injury to others in case of an accident, while the second pays for damage to their property.

Insurance companies often divide liability insurance into three numbers, as in “25/50/10.”

These numbers indicate the policy’s limits in thousands of dollars.

In this case, the policy would include $25,000 to compensate for bodily injury per person, $50,000 per accident, and $10,000 in property damage.

These amounts are not very high, so you may gain additional protection by increasing your liability protection.

This provides a relatively small premium hike in exchange for stronger protection from serious financial consequences.

Below is a table of all states plus Washington D.C. with the minimum coverage requirements of bodily injury and property damage liability.

Plus if the state requires uninsured motorist protection.

I have included the average annual premium by state and a search bar feature so you can check for your state.

StateMonthly RateAnnual RateLiability Limits
(in thousands)
Uninsured Motorist Coverage Required?
Alabama$127$1,52925/50/25No
Alaska$134 $1,60550/100/25
No
Arizona$102$1,42615/30/10No
Arkansas$117$1,40025/50/25No
California$164$1,96315/30/5No
Colorado$130$1,56025/50/15No
Connecticut$137$1,64420/40/10Yes
Delaware$149$1,78815/30/10No
Florida$163$1,95610/20/10No
Georgia$190$2,28025/50/25No
Hawaii$121$1,45220/40/10No
Idaho$103$1,23625/50/15No
Illinois$143$1,71620/40/15No
Indiana$136$1,63225/50/10No
Iowa$106$1,27220/40/15No
Kansas$112$1,344

25/50/10Yes
Kentucky$136$1,63225/50/10No
Louisiana$111$1,33215/30/25No
Maine$86$1,03250/100/25Yes
Maryland$98$1,17630/60/15Yes
Massachusetts
$103$1,23620/40/5Yes
Michigan$206$2,47220/40/10No
Minnesota$148$1,77630/60/10Yes
Mississippi$93$1,11625/50/25No
Missouri$99$1,18825/50/10Yes
Montana$145$1,74025/50/10No
Nebraska$116$1,39225/50/25No
Nevada$98$1,17625/50/20No
New Hampshire$123$1,47625/50/25Yes
New Jersey$168$2,01615/30/5Yes
New Mexico
$114$1,36825/50/10No
New York$103$1,23625/50/10Yes
North Carolina
$122$1,46430/60/25Yes
North Dakota$130$1,56025/50/25Yes
Ohio$69$82825/50/25No
Oklahoma$64$76825/50/25No
Oregon$112$1,344

25/50/20Yes
Pennsylvania$113$1,35615/30/5No
Rhode Island
$156$1,87225/50/25No
South Carolina
$123$1,87225/50/25No
South Dakota$148$1,77625/50/25Yes
Tennessee$135$1,62025/50/15No
Texas$126$1,51230/60/25No
Utah$96$1,15225/65/15No
Vermont$94$1,12825/50/10Yes
Virginia$108$1,29625/50/20Yes
Washington$124$1,48825/50/10No
Washington D.C.$212$2,54425/50/10Yes
West Virginia
$91$1,09220/40/10Yes
Wisconsin$101$1,21225/50/10Yes
Wyoming$83$99625/50/20No

Collision Coverage

Collision coverage, however, pays to repair your vehicle regardless of who is at-fault in the event of an accident.

This kind of coverage is especially important if you have a newer, more expensive vehicle.

In fact, it may be required by your lender if the car has not been fully paid for.

Higher deductibles for comprehensive is a lower cost for drivers.Note: Above is an illustrative example of how deductible price influence the cost of your premium for comprehensive. It is the same for collision too. If you have a higher deductible, you take on more risk, and in return have lower premiums.

Comprehensive Coverage

Comprehensive coverage also provides protection for your own vehicle.

Unlike collision, it covers non-collision-related events like theft, vandalism, or natural disasters.

Below is a table showing the additional cost of comprehensive and collision for the most populous states. 

StateAverage Liability PolicyWith Comprehensive / CollisionAdditional Cost
California$962$1,916$954
Florida$1,009$1,830$821
Georgia$593$1,391$798
Kentucky$612$1,496$884
New York$1,169$2,456$1,287
Texas$768$1,495$727

Personal Injury Protection (PIP)

Personal injury protection (PIP) supplements your health insurance.

Sometimes called no-fault insurance, it covers injuries regardless of who was at fault for the crash and is required in some states.

This type of coverage addresses medical bills, and sometimes lost wages and other expenses.

Uninsured/Underinsured Motorist Coverage

Uninsured/underinsured motorist coverage is another type of protection that can help you in case you’re involved in a crash with an uninsured driver or underinsured driver.

Unfortunately, some drivers may not maintain even the state minimum coverage.

Plus, they may not personally have the funds to pay for your damages, even when they are at fault.

This type of coverage is relatively inexpensive, and it could protect you in a bad situation.

Most important, many states are requiring uninsured motorist protection since there is high amount of drivers without coverage.

To give you an idea of the number of drivers without proper protection, I have included a table below with the state uninsured motorist rate and the statistics by city.

Again, I have included a search bar function so you can check your city or state.

StateUninsured Motorist RateCity with Highest Uninsured MotoristsUninsured Motorist Rate
Alabama19.6%Madison22.6%
Alaska 13.2%Anchorage15.9%
Arizona 10.6%Prescott Valley16.6%
Arkansas 15.9%Fayetteville15.3%
California 14.7%Brea11.8%
Colorado16.2%Littleton14.9%
Connecticut 8.0% Milford10.4%
Delaware 11.5%Dover19.6%
Florida 23.8% Sarasota 30.3%
Georgia 11.7% Marietta14.3%
Hawaii 8.9%Honolulu8.9%
Idaho 6.7%Idaho Falls7.3%
Illinois13.3%Carol Stream14.6%
Indiana 15.2%Greenwood18.9%
Iowa 9.7%Cedar Rapids6.9%
Kansas 9.4%Lenexa12.4%
Kentucky15.8%Bowling Green18.4%
Louisiana 13.9%Baton Rouge13.9%
Maine 4.7%Portland5.9%
Maryland 12.2% Hagerstown16.5%
Massachusetts 3.9% Leominster4.5%
Michigan 21.0%Dearborn Heights29.8%
Minnesota 10.8%Edina14.7%
Mississippi 22.9%Meridian27.4%
Missouri 13.5%Cape Girardeau13.5%
Montana14.1%Missoula14.1%
Nebraska 6.7%Bellevue6.7%
Nevada 12.2%Carson City16.9%
New Hampshire 9.3%Concord10.7%
New Jersey 10.3%Sayreville12.7%
New Mexico 21.6%Rio Rancho24.2%
New York 5.3%Troy5.3%
North Carolina 9.1%Hickory10.1%
North Dakota 5.9% Grand Forks6.4%
Ohio 13.5%Cleveland Heights13.5%
Oklahoma 25.9% Moore27.3%
Oregon 9.0%Beaverton9.0%
Pennsylvania6.5%State College6.5%
Rhode Island 17.0%Pawtucket19.1%
South Carolina 7.7%Greenville7.9%
South Dakota 7.8%Rapid City7.8%
Tennessee 20.1% Smyrna22.7%
Texas 13.3% Coppell13.3%
Utah 5.8%Sandy5.8%
Vermont 8.5%Burlington9.0%
Virginia 10.1%Blacksburg14.4%
Washington 16.1% Bremerton18.4%
West Virginia 8.4%Charleston8.4%
Wisconsin 11.7%Brookfield12.5%
Wyoming8.7% Casper10.7%

Amazingly enough, many cities across the country have an uninsured motorist rate of 25% to 30%!

That is 1 to 3 or 4 drivers in some areas without adequate protection.

If you are in accident with one of these drivers and don’t have proper protection?

You are out of luck. 

How Insurance Companies Determine Your Risk

Insurance premiums are based on the insurance company’s estimates of the level of risk you pose.

While some individualized data is considered, including your accident history and driving record, many other factors are used for statistical estimates.

These factors include the driver’s age, gender, location, marital status, mileage driven, and even the type of car insured.

Insurance companies offer lower premiums to the drivers they believe will cause fewer accidents, based on their statistical model.

Some factors weigh more heavily than others; age, gender and driving record are given greater weight and can help determine the type of policy you choose.

Case Study – Kevin

For example, a 26-year-old man named Kevin owned a 2012 Ford Focus.

He had liability insurance only, as mandated by state minimums.

Although he is over 25, he still will face higher premiums than someone a decade or two older.

In addition, his car was not particularly sporty or known for speedy, dangerous driving; this might lower his premium cost a bit.

However, by opting for only liability insurance, Kevin did not have protection for his own vehicle when in a crash.

When he got into an accident and was deemed responsible, his policy paid out to its limits for the other party’s medical bills and property damage.

Since their injuries were relatively minor, this handled it.

However, if they had been hospitalized, Kevin could have faced a lawsuit for the additional sums.

Kevin also had to pay out of pocket to repair or replace his own car.

How to determine to buy comprehensive & collision. Note: Many times I am asked about buying comprehensive and collision. Illustrated above is a good guide to determine when to buy and when not. If you have vehicle which is valued at $4,500 and have that amount in the bank, you might be better off forgoing both comprehensive and collision to maximize savings.

Case Study – Jen

In another case, a 19-year-old woman, Jen, owned a 2016 Subaru BRZ.

She had liability insurance as well as uninsured motorist protection.

While she saved on her insurance due to her gender and high credit score, Jen also paid more due to her age and choice of car.

When she was hit by a hit-and-run driver, her uninsured motorist coverage was able to fill in the gaps.

However, she had a $500 deductible on her policy that she had to pay out of pocket.

Her coverage was able to pay for the damage to her vehicle, as well as address her medical bills.

How to Lower Your Premium

When you’re looking to save on car insurance, you can take action to improve your rates.

Boosting your credit score can also help you reduce premiums.

By far, the best way to keep your rates low, is to only file claims when absolutely necessary. And keep a clean driving record. 

Retired Agent

Choosing a car with a good safety record helps you to save, as well.

Of course, the most effective method of all is to have a clean driving record with few, if any, claims.

Bottom Line

Don’t be afraid to shop around. 

Only one in four car insurance policyholders said they had shopped around for a better deal in the previous year.

Consumer Reports

You won’t get all of the information you need from commercials, and you may find the best deal where you least expect it. 

Online comparison tools like those at NerdWallet can help you compare prices from various insurers.

Plus, you may want to consider local companies in addition to the national giants.

Some may offer a great deal.

Selecting auto insurance is an individualized process that could save you hundreds of dollars every year.

By considering your unique needs, you can maximize protection and minimize costs. 

(Note: this article is strictly informational in its intent as the author has no affiliation with any provider.) 

References

https://www.thehartford.com/car-insurance/why-car-insurance-important

https://www.nerdwallet.com/ways-to-get-cheapest-car-insurance/

https://cars.usnews.com/cars-trucks/everything-you-should-know-about-car-insurance

Andrew Buchanan

Andrew Buchanan

Andrew Buchanan is a two-time Super Lawyer and partner at Buchanan, Williams, & O’Brien, a personal injury law firm with offices in Joplin, Carthage, and St. Louis, Missouri. Andrew Specializes in helping people who have been injured, with a focus on automobile and truck accidents, product liability, premise liability, wrongful death, and work accidents.

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