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Everything you need to know about auto insurance quotes

The insurance industry is not regulated at a federal level. It’s left to the individual states to make their own rules on the types of policy that can be offered in auto insurance quotes. This patchwork of laws makes it difficult to talk about insurance.

At-fault and no-fault cover

At a federal level, the law of negligence decides who’s at fault and so liable to pay damages for loss and damage caused. But when it comes to traffic accidents, some states have diverted cases away from the courts. Everyone injured claims from their own insurance company. Three states give you a choice between the two systems:

  • Kentucky
  • New Jersey
  • Pennsylvania

The following states have a strict no-fault system:

  • Florida
  • Hawaii
  • Kansas
  • Massachusetts
  • Michigan
  • Minnesota
  • New York
  • North Dakota
  • Utah

The mandate

Every state with the exception of New Hampshire has a formal mandate in place. This makes it a criminal offense to drive a vehicle on the public roads without a minimum liability auto insurance policy in place. All the states set three minimum amounts of cover for personal injuries and property damage to guarantee some financial responsibility from drivers. New Hampshire does not mandate auto insurance rates or require you to buy an insurance policy. Its Financial Responsibility Laws require you to demonstrate you have sufficient funds to pay out should you be at fault in an accident. You must also buy a minimum amount of health insurance to pay for your own treatment should you be injured.

There are three basic types of policy

There is a wide range of different coverage available in the different US states protecting you from the cost of medical treatment in a hospital or hiring a replacement vehicle while yours is being repaired. Every state has an Insurance Commissioner whose job it is to approve what cover can be sold. For the detail of what is available in your state, refer to your local Commissioner’s website. Note that, in at-fault states, you have personal liability for all the loss and damage you cause. If you are uninsured or you did not buy enough insurance, you have to pay the balance out of your own savings. That said, there are three basic types of policy:

  • Liability

    In at-fault states, you are liable to pay damages if you are to blame for the accident and the injuries people suffer. Every US state requires you to be able to prove some level of funds available to pay for medical treatment and/or repairs. If you do not have an auto insurance policy in place or guaranteed funds, you commit a criminal offense and states have the power to fine and, in some cases, confiscate your vehicle.

  • Collision

    If your own vehicle is damaged in a crash, whether with another vehicle or other property, this policy pays out for the repair of your own vehicle up to an agreed amount. If it will cost too much to repair, your car is totaled and you get the fair market value and can buy a replacement.

  • Comprehensive

    This pays for all your losses if your vehicle is stolen or damaged in a way not involving a collision.

How much does insurance cost?

Although every insurance company has developed its own detailed methods for calculating whether an individual is likely to make a claim, the general approach is to look at the driver’s profile. Who is this person? Where does he or she live? What job does he or she have? How long has he or she been driving? Have there been any accidents or tickets issued? What make and model is being driven? And so on. Now consider local environmental factors. Some states may have snow and ice on the roads for part of the year, others may be visited by tornadoes and hurricanes. Some may have large cities where many people drive very expensive vehicles. Others may be rural and have few vehicles on the roads. That means there can be big differences between the cost of insurance in different states.

In a survey released in 2012, applications were made using the same driver profile in every state. Here are the states with the lowest average auto insurance quotes from the top to the lowest overall:

  • Arizona
  • New Hampshire
  • South Carolina
  • Ohio
  • Vermont
  • North Carolina
  • Idaho
  • Wisconsin
  • Iowa
  • Maine

Here are the most expensive states for auto insurance quotes from the top down:

  • Louisiana
  • Oklahoma
  • Michigan
  • West Virginia
  • Washington, D.C.
  • Montana
  • Rhode Island
  • Wyoming
  • California
  • Georgia

The difference between the most expensive Louisiana and the cheapest Maine is $1,650 a year. This should reinforce the need to shop around if you live in one of the most expensive states.