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.
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.
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.
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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.
Too long, didn’t read?
Florida has some of the highest car insurance rates in the nation, making it all the more important for drivers to shop around before choosing a policy. There are plenty of good options available. Whether you’re looking for a company with outstanding coverages, top-notch customer service or low rates, there’s a carrier for you.
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.
Last editorial update – December 7, 2020, updated car insurance reviews and editorial buying guide.
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; location; 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, 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
Need to boost your credit score and improve your car insurance rates?
Become an authorized user on someone else’s credit card (if they have good credit).
Pay down at least one balance or request a limit increase. Either will give you points for having more available credit.
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 another 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 paying down high interest debt. Remember, improving your credit score is a marathon, not a sprint. It will take some time 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.
Too long, didn’t read?
How much you’ll pay depends on a number of factors and will vary by company. But that doesn’t mean your rate is entirely out of your control. While there are factors you can’t easily change –– your age and where you live, there are still some things you can do to find savings.
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.
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
Too long, didn’t read?
Car insurance is mandatory primarily to protect other drivers on the road from the high costs of an accident that they didn’t cause. Some coverage options help mitigate the risks related to uninsured motorists or no-fault accidents. Your state minimum compulsory insurance can vary in price depending on many factors. Still, you’ll want to make sure you also consider the benefits of choosing a policy with more than the state minimum coverages.
We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.
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.
Too long, didn’t read?
After a serious driving offense like a DUI or driving with a suspended license, you might be required to have your insurer file a certificate of financial responsibility on your behalf. In most states, these forms are called SR-22s. While Florida and Virginia do have SR-22s, they also have FR-44s for more serious driving violations. If you need an FR-44, you’ll be required to have significantly more liability coverage than the average driver in your state.
We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.
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.
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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? ]
Too long, didn’t read?
Moving out of state requires an update to your auto insurance, whether your policy simply needs to be changed to the new address or a new one needs to be purchased altogether. The best place to start is with your current insurance carrier. It’s important to update your insurance as soon as you move. Most states require you to register your car within a specified number of days, and doing so will require proof of in-state insurance coverage.
We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.
Finding reliable car insurance can be frustrating for anyone. After the carrier who offered your best option for auto insurance denied your application, it can be hard to decide what to do next — but there’s still hope.
Car insurance companies want to insure people whom they think are low-risk. The factors that determine your risk can be improved over time. And some companies are more willing to insure riskier policyholders. If the first or second provider doesn’t work out, you still have plenty of options. Here’s what you can do to find coverage now.
In this article
Why some insurance companies deny applications
Car insurance providers favor people who the provider thinks are less likely to file a claim. To decide who these drivers are, car insurers factor in information like driving record, credit history, age, location and more.
You can affect some factors, but others are beyond your control. If your application was denied, the insurer might not tell you why. But you can always call and ask. Here are a few of the reasons why some car insurance companies commonly deny applicants:
Driving record: If you have moving violations or at-fault accidents on your record, it will affect your car insurance cost. If you’ve experienced many violations or accidents, then some car insurers may deny your application.
Location: Car insurers commonly draw on location-based crime statistics to determine risk in a policy. If you live in an area that experiences high levels of property crime, such as theft or vandalism, then the insurer may be less willing to insure your vehicle.
Previous lapse in coverage: A red flag car insurers commonly look for is a lapse in coverage. If you’ve allowed your car insurance to expire in the past without getting a new policy, it could make it more difficult to find insurance.
Credit history: Some car insurers may deny applicants who have a spotty credit history. The insurer could use this as an indication that you have trouble keeping up with monthly payments.
Type of car: If you have a car model that’s known to be dangerous on the road, it could make car insurers wary. Some car insurers might stay away from insuring certain types of cars.
Outside coverage area: Many car insurers only offer coverage in certain states or areas. If you live outside the insurer’s area of coverage, they won’t be able to provide you with insurance.
[ Read: Non-Owner Car Insurance: What Is It and Who Needs It? ]
What to do if your car insurance application was denied
Having a car insurance application denied is never fun. But it’s not the end of the road. It’s always a good idea to ask why you were denied so you can get an idea of how to improve your profile for future applications. If you’re having trouble finding traditional auto insurance, here’s what to try next.
Short-term options:
High-risk car insurance: Some insurance providers offer policies specifically catered to high-risk drivers. If your preferred carrier won’t cover you, a high-risk provider might be able to help. Keep in mind these policies can be more expensive than standard policies.
State-run high-risk insurance: Some states have insurance pools for drivers who can’t find insurance with a regular provider. For example, Maryland Auto Insurance is state-run insurance for Maryland drivers who can’t find coverage elsewhere.
Family member’s insurance policy: If you can’t find insurance, a family member might be able to add you on to their existing insurance policy. Many providers only allow this if both people live at the same address. But some make exceptions for college students.
[ Read: The Simple Guide to Car Insurance ]
Long-term options:
Improve driving record: If you can stay accident- and moving-violation free for a year or more, it could improve your chances of qualifying for standard auto insurance.
Improve credit score: If you can boost your personal credit by paying off debt and staying on top of your monthly payments, then it could also help you find auto insurance from a standard provider.
Check again in six to 12 months: Companies often shift their guidelines, and your chances of getting approved could change in the future. After six months or a year apply again.
Where to get car insurance when standard companies won’t insure you
People often ask, “can car insurance companies deny coverage?” And unfortunately, they can. If the standard car insurance carriers are not doing the trick, there are high-risk insurers who can help. If you get approved for high-risk insurance, it will probably be more expensive than a standard policy. Here are a few places to try:
[ Read: What’s the Average Cost of Car Insurance In the U.S.? ]
State Farm: This well-known provider offers car insurance policies of all kinds, including policies for high-risk drivers. They also have many discounts available, which could offset the generally higher cost of coverage.
The General: This provider has specialized policies just for high-risk drivers. If other companies deny you coverage, this company should be able to help. You can even get a quote through their website.
Bristol West: This provider is run by Farmers Insurance, and Bristol West had dedicated policies just for drivers who’ve been denied by standard providers due to a driver’s higher risk.
State-run insurance pool: If no private insurers will agree to give you coverage, check to see if your state offers an insurance pool for high-risk drivers. This is generally the last option to try.
How to get better deals on auto insurance
If your monthly insurance premium is high, there are many ways to offset the cost. Most car insurance providers offer discounts for a variety of things, and it’s always worth a phone call to see what you might qualify for.
[ Read: How to Switch Car Insurance Companies ]
A few of the most common discounts include a bundling discount for multiple policies such as combining car and home/renters insurance, a discount for setting up auto-pay, a loyalty discount for using the provider for a certain amount of time, and a paperless discount for having your policy and payment details emailed to you.
Another option is shopping around for a new car insurance provider. Getting quotes is now fast and easy using provider websites or a mobile app. Many of the larger car insurers have online quoting tools that you can use to get a quick estimate of how much your monthly premium will cost.
Too long, didn’t read?
If your insurance application was denied, call the company and ask an agent what you can do. You may be able to better your chances by driving safely and improving your credit score. But if you can’t find a standard car insurance policy, some car insurers offer high-risk policies, and some states have their own insurance pools for high-risk drivers.
We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.
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? ]
Too long, didn’t read?
Is it illegal to not have car insurance? It’s not in two states, but it’s always a bad idea. Alternative options often require tens of thousands of dollars that could be better invested elsewhere that would more than pay for each state’s minimum coverage. For this reason, we highly recommend that each driver insure his or her car (here’s a list of our favorite companies to work with).
When shopping, don’t just consider the cost of minimum liability. It’s often far wiser to purchase comprehensive and collision, too.
We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.
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.
Too long, didn’t read?
A flood-damaged car can be a nightmare, but your insurance can help you if you’ve got the right coverage. If your car is caught in a flood, contact your insurance agency right away and document all your damage. Hopefully, they’ll be able to help you out and get you back on the road in no time.
We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.
The older you get, the more you have to insure. First, it’s your car, then your home, then your life and the list goes on.
These are all valuable things worth protecting, but the costs can add up. Americans saw their rates for homeowners insurance rise by more than 45% from 2008 to 2017, according to the Insurance Information Institute.
Home and auto insurance policies are two of the most common types of coverage, and it can be an expensive headache to find the right policies. But there is a way to simplify and save — bundling insurance.
When you bundle home and auto insurance policies together with the same carrier, you can lower your premium significantly.
In this article
What is bundling?
Any time you group together more than one type of insurance policy from the same insurer, you are bundling insurance policies. When you do this, most insurance companies offer bundling discounts, also known as a multiline or multipolicy discount.
The reason for bundling discounts is simple — insurers want more of your business! If insurance companies can persuade you to bundle home and auto insurance policies that you currently have with other providers, they’re getting a larger monthly premium from you than they would for just one policy, even if it’s discounted.
Providers will usually allow you to bundle any policies they offer. Car and home insurance bundles are the most common, but many insurers offer discounts for bundling renters and car insurance policies, as well as combinations of life, boat, RV and other specialty insurance offerings.
Savings for bundling insurance can vary — and will usually increase as you bundle more policies — but typically range between 10% and 25%. Most companies advertise savings of up to a certain percentage, but the best way to find out what you can save is to get a few quotes and compare your bundling discount options.
[ Read: The Simple Guide to Car Insurance ]
Pros and cons of bundling home and auto
Pros
Discounts: More often than not, your insurance provider will offer you a discount of 10% to 25% for bundling home and auto insurance. Some insurers even advertise up to 29% savings on some policies when you bundle.
Convenience: When you bundle car and home insurance — and any other policies — with the same company, it’s one less bill to manage. You don’t have to call different agents for insurance claims since the entire process is simplified and streamlined under one provider.
Security: If you frequently make claims on any policy, you are in danger of having your insurance company drop you. The more policies you have with one provider, the less likely this is to happen. If you tend to get into a lot of car accidents, it may be smart to bundle your car policy with home and life insurance to reduce your risk of losing coverage.
Combined deductibles: Some insurers will even combine your deductibles when you bundle. That means a claim involving more than one policy wouldn’t be subject to multiple different deductibles. A storm, for instance, could easily damage both your home and your car. In that case, a combined deductible could significantly lower your out-of-pocket costs.
Cons
You could miss out on savings: Because it’s simpler to combine policies with one insurer, you may be less likely to shop around for the best rates. In some cases, you may find lower rates by getting a variety of home and auto insurance quotes and picking the ones that offer you the lowest rate outright.
It may be less convenient than you expect: Some insurers bundle policies through affiliate providers, which still gets you a discount but removes some of the convenience of dealing with one agent. When you’re making home and auto insurance bundle comparisons, be sure to ask about how you’ll make claims for each of your policies.
Your discounts may erode over time: Discounts for bundling insurance are designed to build loyalty, so it’s easier to set it and forget it. This may be convenient, but if you don’t pay attention, your insurance provider can gradually raise your rates with each renewal and chip away at your savings.
[ More: The Average Cost of Home Insurance ]
Compare home and auto bundles, by insurance company
Insurance Company
Advertised Bundling Discount
Other Available Bundles
Progressive
12% on average
Any combination of two or more policies
Allstate
Up to 10% on auto and 25% on home
Life and renters
Esurance
Up to 10%
None advertised
Farmers
20% on average
Life, umbrella, small business and specialty
Nationwide
Up to 20%
Auto, boat, renters and life
Travelers
Up to 10%
Renters
Amica
Up to 25%
Life
State Farm
Up to 17%
Renters, condo and life
USAA
Up to 10%
Renters
American Family Insurance
Up to 29% on auto and 20% on home
Life, auto, RV, condo, boat, umbrella
Tips for bundling home and auto insurance
All bundling is not created equal, and sometimes you may not get a great deal. However, there are a few things you can do to make sure you get the most out of bundling car and home insurance. Here are a few tips:
Shop around
Whether you’re bundling or not, you’ll never know if you’re getting the best rates unless you shop around. Compare auto and home insurance quotes — both as individual policies and bundled — and be sure you are getting a deal you’re happy with.
Ask about affiliates
If convenience is a priority for you, then don’t forget to ask your agent about any affiliates or third parties that would be involved in your policy. It might not make sense to go through all the effort of combining policies for a small discount if you won’t also save yourself time and headaches when you make claims.
Don’t bundle more than you need
Insurance companies always want you to buy more, and bundling discounts are a big incentive they use to encourage that. But that life insurance policy might not make sense if you’re just out of college with no dependents and a starting salary. Only pay for what you need — and reevaluate those needs regularly.
Check in regularly
Your insurance needs, along with your rates and potential discounts, change over time. You should check in with your agent frequently — and compare prices with other insurers — to make sure you’re getting the best available premiums. Renewal time is usually a good reminder to check in and make changes.
[ See: Best Cheap Insurances ]
Too long, didn’t read?
Bundling home and auto insurance policies can be a great way to save money and simplify how you manage your policies. But it does still take some work to ensure you’re getting the best deal and maximizing convenience. If you take the time to compare your options and discuss the details with your agent, you may find that bundling is a great option for you.
We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.
