The Average Costs of Car Insurance

Car Insurance Costs

Your automobile insurance policy’s liability coverage compensates you for bodily harm and property damage you cause to others in an accident. We studied state insurance agency statistics and discovered that annual premiums are growing in most U.S. states. The average costs of car insurance coverage have climbed except in Arkansas, Georgia, North Carolina, and Virginia. These car insurance estimates for specific states will provide you with a reasonable indication of the annual average cost of auto insurance. 

Is a standard auto policy’s minimal liability coverage limit sufficient?

The legal minimum costs of car insurance coverage vary depending on where you live. It is not, however, the amount of liability coverage you should carry. The total cost of an accident can surpass the limitations of liability coverage on a driver’s insurance. When this happens, the driver’s assets are exposed and can be seized in a lawsuit to pay for the remaining claim, especially if your net worth is more than the claimed damages.

Patti Clement, HUB International’s first vice president in New York, advised on car insurance coverage as follows: “Make certain that you obtain the necessary liability coverage, not the bare minimum. Suppose you are in an accident and have split limits and inadequate coverage. In that case, you will be out of pocket for any damages that exceed those limitations for physical injury and property damage.”

“I tell prospective clients to acquire as much liability coverage as they can realistically afford, preferably over your whole assets and then some,” said Kristofer Kirchen, president of First Florida Insurance Network of Central Florida. “This is because, regardless of your possessions, you do not influence who is hurt or the magnitude of that injury.”

Is there a different place in your budget for increased vehicle insurance coverage?

It is hard to predict what incidents may occur and at how much risk you are. It is, however, simple to limit that exposure to the total value of your estimated net worth, which serves as a standard for adequate vehicle insurance coverage.

Calculate the worth of your home, autos, investments, retirement accounts, banking accounts, and any other assets, minus your total debts and obligations, to establish your recommended auto insurance liability coverage. If you want to have a lot of security and can afford it, you can get even more coverage limitations.

Drivers must have statutory liability insurance or proof of financial responsibility (in certain states). “If pressed, I would say that if they can’t afford more, they should acquire at least 25/50/25, but I stress that individuals should buy as much as they can afford,” Kirchen said.

If you want to discover what your state’s minimum vehicle insurance coverage requirements are, look no further. In Alabama, the insurance company will pay up to $25,000 per person or $50,000 per accident for injuries. Furthermore, the insurance will pay up to $25,000 per accident (the third figure) in property damage.

Although Auto insurance is not necessary for New Hampshire, these are the minimum requirements if you choose to buy it (or if they ask you).

According to Kirchen, paying a few hundred dollars a year for recommended auto insurance is preferable. Which is far better than losing a few hundred thousand dollars over a lifetime. Now that you have a more precise grasp of what constitutes appropriate liability vehicle insurance coverage, begin researching which auto insurance companies can supply it at the most affordable prices.

Car Insurance Costs

An illustration of insurance compensation for liability claims

Let’s use a hypothetical collision in New Jersey to demonstrate the concept of adequate or recommended liability auto insurance coverage. In Garden State, the minimum liability vehicle insurance coverage limit is 15/30/5. The maximum claim for bodily injury is $15,000 per person, with a $30,000 maximum payout for additional injuries. And a $5,000 payout for property damage caused by an accident.

Assume you collide with another vehicle carrying a driver and a passenger. The driver and passenger in the second automobile got a severe injury, and their vehicle has got huge damage. Both the driver and the passenger will file third-party claims for the following: 

  • $25,000 for physical injury to the driver
  • $10,000 for bodily injury to the passenger
  • $6,000 for property damage to the driver’s car.

Under the terms of your typical auto insurance policy, your insurer will pay the maximum coverage limit. Your insurer will pay $15,000 in personal injury liability for the driver. He will pay $10,000 in bodily injury liability for the passenger, and $5,000 in property damage liability. All of this is under your 15/30/5 plan. The following are the extra charges that your auto insurance policy does not cover: 

  • $10,000 for further medical care for the driver
  • $1,000 for vehicle repair.

The other party can go after the rest of your assets to make up for the unpaid balance. “If you do not have the required limitations,” Clement warns, “the balance from your coverage is taken, and you will have to pay that out of pocket for the rest of your life, including garnishing your salary or income.”

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