Why we Need Car Insurance

Car insurance is necessary for a number of reasons.  The main reason is that most states require it. Even states that don’t require the purchase of car insurance require proof of financial responsibility.  Proof means you have to continuously maintain a specified amount of money (like $30,000) in your bank account.  More often than not, the required proof is an amount so high that you might as well just buy car insurance.

Car insurance is also necessary because the cost of repairs for even minor accidents is usually thousands of dollars.  Many uninsured drivers cannot afford to repair damages to their vehicles.

Another important reason to carry car insurance is the risk of bodily injury, or even death, when the other driver gets angry after being hit by an uninsured vehicle.

Facts About Car Insurance

Regarding states where liability insurance is required, some states don’t let drivers register vehicles without showing proof of liability insurance, while other states only require proof of insurance upon request, usually at the scene of an accident.

To work out annual rates on car insurance, carriers process decades of traffic information into actuarial tables that give claim adjustors an overview of the probability of just about any traffic-related occurrence.

According to the National Association of Insurance Commissioners (NAIC), the ten most expensive states for buying auto insurance (as of 2012) were New Jersey, DC, New York, Florida, Louisiana, Delaware, Michigan, Rhode Island, Connecticut and Massachusetts, in that order.  The ten states with the least expensive auto insurance rates were Idaho, South Dakota, Iowa, North Dakota, Maine, Wisconsin, North Carolina, Nebraska, Wyoming and Kansas, in that order.

Calculations were based on a hypothetical 26-year-old male with no accident history, insuring a new Toyota Camry, and assuming liability limits of 100/300/50, with a $500 deductible.   That means $100,000 in coverage against personal injury to the driver, $300,000 in coverage against injury to other people, and $50,000 in coverage against property damage.

Other location-related factors with a significant impact on car insurance premiums include urban population, traffic density, and per capita income.  State laws, auto repair costs, liability coverage requirements, theft rates, and other factors can also affect the cost of auto insurance.

According to recent reports from the NAIC, the average annual expenditure for auto insurance in the United States was $814.99 in 2012.  South Dakota had the cheapest average annual cost at $556.51, while New Jersey was the costliest state for car insurance, with an average annual expenditure of $1,219.93.

In 2014, the U.S. cities with the nation’s highest average annual premiums were Detroit (MI), New Orleans (LA), Grand Rapids (MI), Newark (NJ), Baton Rouge (LA), Hialeah (FL), Jersey City (NJ), Louisville (KY), Miami (FL), and Philadelphia (PA).

Over the same time period, six of the nation’s ten least expensive cities for car insurance were located in North Carolina.  The ten cheapest cities for car insurance premiums were Winston-Salem (NC), Greensboro (NC), Raleigh (NC), Durham (NC), Charlotte (NC), Boise (ID), Rochester (NY), Fayetteville (NC), Spokane (WA), and Montgomery (AL).

The average annual premium for car insurance indicates the amount consumers actually spend per vehicle, as opposed to the average cost of premium packages offered by the insurance companies.  Different states have different minimum requirements for auto insurance.

In terms of total dollar values of policies written, the nation’s top ten private passenger auto insurance carriers (according to SNL Financial) are State Farm Mutual, Berkshire Hathaway, Allstate, Progressive, Farmers Insurance, USAA, Liberty Mutual, Nationwide Mutual, American Family Mutual, and Travelers, in that order.

In 2013, the average auto liability claim for property damage was $3,231, the average auto liability claim for bodily injury was $15,443, the average collision claim was $3,144, and the average comprehensive claim was $1,621.

The info presented here can be used to evaluate quotes on car insurance.  To get started, obtain a lot of free online quotes.  Simply select your state from the search bar shown here.