Purchasing car insurance in the United States can be a daunting task for drivers from the UK who are unfamiliar with the American insurance system. While there are some similarities between the UK and US when it comes to auto insurance, there are also significant differences that UK motorists need to be aware of. This guide will provide an overview of the car insurance landscape in the US and offer tips for UK drivers on how to buy adequate and affordable coverage.
Understanding Minimum Requirements
In America, auto insurance requirements vary by state. Liability coverage is mandatory in all states except New Hampshire. This means drivers are required by law to purchase insurance policies that cover bodily injury and property damage liability at minimum prescribed limits, which differ across states. For example, Florida requires drivers to carry $10,000 in personal injury protection (PIP) and $10,000 in property damage liability (PDL), while California requires $5,000 in PIP and $5,000 in PDL.
Unlike the UK, where liability coverage is unlimited, US states cap liability limits. Common minimum liability limits are:
- $25,000 bodily injury per person
- $50,000 bodily injury per accident
- $25,000 property damage
So at a minimum, UK drivers in the US must understand their state’s liability coverage requirements and purchase a policy that meets or exceeds those limits. Buying only the minimum required coverage may expose drivers to significant financial risk though. Experts recommend also considering higher liability limits and adding other supplementary coverages like collision and comprehensive.
Comparing UK and US Policies
In the UK, car insurance policies are bundled into a single package that combines coverage we would consider liability, collision, and comprehensive in the US. US auto policies are broken down into these distinct coverage types that drivers can customize.
Liability coverage in both countries functions similarly, providing protection if you cause an accident that injures someone or damages property. Collision and comprehensive (combined under one heading in the UK) also work the same way on both sides of the pond. Collision covers damage to your car from an accident while comprehensive covers damage from theft, vandalism, weather, animals, fire, and other non-collision events.
The major difference is that UK minimum liability is unlimited while the US has set caps based on each state’s requirements. Additionally, some coverages common in American policies like personal injury protection and uninsured/underinsured motorist coverage do not have direct equivalents in the UK.
Factors That Affect Insurance Rates
Just as in the UK, insurers in the US consider many factors to determine your premiums. These include:
- Driving record – Having past accidents, traffic violations, or DUIs will increase your rates. Insurers will obtain your motor vehicle report to view your driving history.
- Type of vehicle – Insuring flashy sports cars or expensive luxury vehicles costs more than insuring a family sedan.
- Vehicle attributes – Factors like engine size, age, safety features, and anti-theft devices impact premiums.
- How the vehicle is used – Insuring a car driven for business purposes generally costs more than insuring a vehicle for personal use.
- Where you live – Drivers residing in crowded cities with high accident rates tend to pay more.
- Annual mileage – Motorists who drive fewer miles per year benefit from lower premiums.
- Credit score – In most states, insurers check your credit as one proxy for risk. Poor credit equals higher rates.
- Age – Young drivers and elderly drivers tend to pay the most due to lack of driving experience or deteriorating skills.
- Marital status – Married drivers often receive lower premiums than single drivers.
- Gender – Statistics show male drivers tend to cost insurers more in claims, so men pay more than women.
- Coverage limits – Higher liability limits and lower deductibles mean higher premiums.
Tips for Buying Car Insurance
With an understanding of how US auto insurance works, here are some tips for UK motorists obtaining coverage:
- Compare quotes from at least three insurers. Rates can vary significantly between companies.
- Consider an insurance broker. They can help you navigate options and find the best rate.
- Ask about discounts. Insurers offer discounts for things like low mileage, anti-theft devices, paying your premium upfront, bundling policies together, and being a safe driver.
- Raise your deductible. Opting for a higher deductible lowers your premiums. Just be sure you have savings to cover the out-of-pocket expense if you file a claim.
- Limit your coverage. Dropping collision and/or comprehensive coverage on older cars often makes financial sense.
- Check your credit. Improving your credit score can potentially lower your car insurance premium.
- Inquire about usage-based programs. Some insurers offer apps or devices that track driving habits and offer discounted rates for safe driving.
- Maintain a clean driving record. Avoid accidents, traffic violations, and DUIs as these drive up insurance costs.
- Shop around every renewal. Don’t just accept your insurer’s renewal quote each year – the market is constantly changing.
Navigating car insurance in the US takes research and effort for UK transplant drivers. But finding the right policy at a reasonable rate is doable with some diligence. Follow the tips above to make sure you obtain adequate coverage at the best available price.