The average American pays nearly $2,000 per year for auto insurance. This amounts to roughly $166 per month. This figure is a good starting point, but it’s not the amount every American should expect to pay. Auto insurance rates vary greatly based on factors ranging from age, address, and gender to employment, usage, and driving history. Many auto insurance companies use credit reports as a risk assessment tool as well and they also consider the type of car you drive (i.e. luxury, sports, SUV, sedan).
While the risk assessment process can be confusing, state minimum requirements can be confusing as well. All 50 states and the District of Columbia have minimum auto insurance requirements. For example, in the state of California, all drivers must carry a minimum of $15,000 for injury/death to one person, $30,000 for injury/death to more than one person, and $5,000 for damage to property (15/30/5). But at 50/100/25, the requirements in both Alaska and Maine are much higher than California and all other states. Even in states where the mandatory minimum is in the mid to high range, auto insurance companies and insurance departments still recommend carrying coverages above and beyond the minimum.
In the state of Florida, for example, all drivers must carry a minimum of $10,000 of property damage liability (PDL) and $10,000 of personal injury protection (PIP). The Florida Department of Financial Services posted the minimum requirements on its website, but the site also advises: “other types of coverage can provide added protection against risks.” Not only this, but according to Autoinsurancetips.com, depending whether you live in a Tort State or a No-Fault state, auto insurance companies will also recommend carrying uninsured/underinsured motorists (UM/UIM) coverage. This type of auto insurance protection can help protect you against drivers that are underinsured (bare minimum) or uninsured.
So, the question is: “how much auto insurance is enough?” The first thing you should consider is the type of car you have, then accident statistics in your state, and finally how often you plan to drive. Consider this scenario: you own a Mercedes C300 Sport Sedan. You live in the state of New York where more than 300,000 accidents occur each year (1,160 fatal), and you drive to and from work and to run errands on a daily basis. All New York drivers must carry a minimum of $25,000/$50,000 bodily injury liability, $25,000/$50,000 uninsured/underinsured motorist bodily injury, $10,000 for property damage, and $50,000 personal injury protection. If you are involved in a serious accident, you are covered up to $10,000 for property damage. Is $10,000 enough to cover your luxury vehicle and all other vehicles and property involved in the accident? If there are multiple serious injuries, remember, the average cost for a 5-day hospital stay in the U.S. can reach as high as $30,000. This does not include tests, procedures, and surgeries. When you consider what could happen and the value of your possessions, you will likely come to the conclusion that double, if not triple the amount of coverage is enough protection.
If you want to obtain the maximum amount of auto insurance coverage for you and your family, it is important to provide the following information to your insurance agent when shopping for auto insurance: age, gender, employment, usage, number of drivers, driving record, address, and the year, make, and model of the vehicle. Most auto insurance companies will also ask for your social security number in order to obtain a credit report.
For more information about auto insurance laws visit your official state insurance department website or AutoInsurancetips.com.
