Auto insurance in the United States: the basics and nuances
For many Americans, the car has become the most common, and often the only means of transportation. Therefore, the auto insurance market in the United States of America is by far the largest in the world. The insurance products offered on it are extremely diverse. Car liability insurance is mandatory in the United States.
The car owner must have an insurance policy for:
- licensing his vehicle;
- renewing his driver’s license.
What the auto insurance covers
Insurers are required to offer three types of coverage. This is a standard, wide and limited collision. Standard collision is a type of auto insurance used in many states. It provides compensation for losses in connection with partial damage or complete loss of the car over the deductible.
The other two types of coverage are specific to certain states. The widespread collision differs from the standard one in that the deductible is not used if the policyholder is “not at fault” for the accident. This type of auto insurance actually takes into account the fault of the participants in the accident. In states with traditional auto insurance, the deductible applies if the policyholder is “at fault”. If the insured is “not guilty”, then his losses must be reimbursed by the insurer of the “guilty” motorist without deducting the deductible.
A limited collision is a non-deductible indemnity if the policyholder is “not at fault”. If he is “guilty” of the accident, no compensation is provided. This form of auto insurance also replicates the situation in states that use traditional insurance. The motorist may choose not to purchase an insurance policy at all. However, he has the right to file a claim for damages to the driver responsible for the accident.
The difference between Liability and Collision Damage Waiver
Liability is a type of auto insurance in the USA that is compulsory for everyone. When Americans rent a car, they always use their own insurance, which covers them perfectly. Exactly for this reason, when you come to the car rental counter at the airport, you have a chance to refuse additional insurance. The clerk who hands over the car to you will note in the contract that you have canceled their insurance. But, when stopped by the police or in case of an accident, you will be asked to provide it. If you don’t have one, then it immediately becomes a criminal offense.
Collision Damage Waiver is additional auto insurance that covers the vehicle you drive. In the event of an accident, regardless of fault, all claims against you will be limited to the amount of the deductible. Deductible – the amount of damage that you cover with your money if you get into an accident through your fault before the insurance begins to cover the damage. This insurance is sold by all major sites and rental companies. The latter tend to have a higher price.
The difference is that if the car is damaged, you will have to deal with both the insurance and the rental company in the first case. If you purchased this insurance directly, you will only have to settle everything with the rental company. In the latter case, you will be immediately given a replacement.
Parameters affecting the cost of the policy
Keep in mind that auto insurance is a complicated process. But, it is inevitable and will save your funds in the future. When calculating the cost of the policy, the following parameters are considered:
- local rights;
- driving experience;
- higher education;
- stable job position and high income;
- family status and the presence of children;
- type of insured car, its age, and price;
- credit report, etc.