Car Insurance in the US Explained

A trip to the States can be very exciting. From the sunny scenes in California and the concrete jungle of New York to the historic buildings in Boston, there’s so much to explore in the land of hot dogs and baseball. Travelling to the United States with kids is an amazing adventure, especially if you are planning a road trip across several states. Being able to go where you want, whenever you want should be your aim as you will want to see as much as possible of this diverse and beautiful country. But renting and driving a car should be done with care or else your holiday might turn into a nightmare.

If you are planning to visit the United States and want to explore the country on four wheels, then you need to know a thing or two about car insurance in the US. This article will help to ensure that you get the right car insurance for driving in the US:

Understanding the jargon

Even if English is your mother tongue, there are many linguistic differences between British and American English. It’s neither here nor there whether your neighbours across the ocean call biscuits “cookies” as you will understand and there wouldn’t be any serious consequences if you don’t. Yet, you could get yourself into a serious financial situation if you take out car insurance without understanding the terminology used across the pond. So, first things first:

Liability insurance

If you want to drive a car in the United States, you will need to take out liability cover as part of your car insurance (or auto insurances as the Americans say). This cover is mandatory in all states except Virginia and New Hampshire, to allow you to drive your car on the road. This is the equivalent of third-party car insurance, which is the minimum insurance cover required to drive your car legally in the UK.

Liability insurance helps pay for legal and medical fees if you’re found to be legally responsible for someone else’s injury, or damage to their vehicle or property. There are limits as to how much these policies pay out and when you examine a policy, you need to look at these figures: There will be a limit for each of these categories: 1. bodily injury per person, 2. bodily injury per accident, and 3. property damage per accident. If any costs exceed either amount, you will have to pay the rest out of your own pocket.

Different states have different minimum coverage requirements. Make sure you check the liability cover offered by your car rental company and pay a little extra to ensure good coverage if it puts your mind at rest. If you want to compare prices to get the best deal, then you can go online to find your own rental auto insurance company. Rental car insurance policies usually include the legally required cover, such as liability coverage, collision damage waiver, and comprehensive auto insurance. Here are a few more explained:

Collision coverage

Liability coverage, just like third-party insurance, is not claimable by you. It covers the costs of medical bills and repairs for the other driver in an accident that’s your fault. While for personal cars, you can choose to skip collision coverage and comprehensive coverage, when it comes to rental cars, companies need you to take out both of these add-ons.

Collision coverage is one of the most popular optional auto insurance policies in the US as it pays for the cost of repairs to your own car as a result of a collision accident. This includes collisions with other cars, trees, posts, and animals. Some companies even include damages due to bad roads.

The cost of collision coverage can be steep, especially if you rent an expensive or large car. Make sure that you get a collision coverage policy that has an adequate limit, so that you don’t have to pay out of your own pocket. You can get collision coverage on a per-day basis, and for as low as $7 to 8 per day.

Comprehensive coverage

You can take all the precautions you want to ensure safe driving on holiday. But some events are outside of our control, and this is where comprehensive coverage, known as “fully-comprehensive” in the UK comes in. It covers the cost of repairs or replacement of your car or vehicle if it is stolen or damaged in an incident that is not a collision, i.e., natural calamities such as floods, earthquakes, fires, hailstorms, etc. as well as riots, vandalism, theft, etc. When renting a car, you are legally required to take out comprehensive coverage. Rental companies bundle comprehensive coverage in the rental auto insurance policy. This add-on is not too expensive and offers great coverage that could save you thousands of dollars.

Optional coverage

Personal injury protection plan:

While the above three are obligatory policies when renting a car in the US, there are some optional extras that you could consider taking out. For example, many states in the US require you to have a personal injury protection plan. This policy will pay for your medical treatment and lost wages if you are involved in a car accident, irrespective of whose fault the accident was.

UM/UIM auto insurance:

Other than personal injury protection, an uninsured/underinsured motorist coverage plan will pay off considering the long hours and distances you will be driving: There are many cases when the driver at fault will either lack a liability insurance policy or have one but with insufficient limit. This could lead to complications. You can, of course, sue the driver but that’s a lengthy process and not necessarily worthwhile of the driver has no funds and you will need to return to the US for court proceedings. Uninsured/underinsured motorist coverage policy is very much worthwhile as this policy will pay out in such a scenario. In case of a hit-and-run, you can also claim on this insurance.

Understanding car insurance in the United States may sound complicated at first. But once you got used to the jargon, it is not that different to what is offered in the UK and across many other European countries. We hope our short guide to car insurance in the US has helped you plan your next trip across the ocean, whether it’s you travelling solo with kids or embarking on a singles holiday. Hopefully your newly acquired knowledge will even save you a bob or two on your car insurance.