Speaking of “the USA” in this context is equivalent to speaking of “Europe,” as the majority of matters pertaining to automobiles (such as traffic laws, ownership, registration, insurance, and other related matters) fall under the purview of the individual states, not the federal government. As a former salesman for Progressive and Liberty Mutual insurance, I recall trying to explain this to people (trying to recall my P&C training from the 1990s).
In order to give you an honest response, I must explain how insurance works in the USA, which, I’m sorry to say, cannot be done briefly. Read on!
The regulations governing insurance vary greatly between states. The discrepancies between the laws of two close neighbors are frequently even bigger than those between, say, Spain and Portugal. This is because different jurisdictions have very different laws governing risk acceptance, negligence, no fault, torts, financial responsibility, insurance requirements, etc.
For instance, Ohio, the state where I presently reside, is a tort state, which means that if an accident occurs, the party who caused it is held responsible. In the neighboring state of Michigan, each insurance company is in charge of paying for its own damages regardless of fault (subject to particular monetary or “quantitative” constraints, frequently the minimum coverage amounts required by state law).
In light of this, there are no-fault and tort principles in all insurance, and my auto insurance protects me regardless of who caused the collision. However, in Ohio, my “uninsured/underinsured” policy—which is comparable to “no-fault” insurance—would cover my property damage and medical expenses if you struck my car without having insurance.
California is a tort state, thus regardless of your insurance coverage, my insurance company will file a lawsuit against you following the collision to seek compensation for ALL and ANY of those damages. According to the tort principle, you are responsible for any damage you bring about.
In Canada, there are a few genuine no-fault states, but none exist in the USA (provinces). Pure no-fault has no upper bound on the no-fault threshold. Therefore, your insurance will still be required to cover those expenses even if I kill your entire family and total your Lotus Esprit.
As I indicated earlier, a few of US States have quantitative no-fault rules, which means that if you cause physical hurt or property damage to someone else and their insurance coverage has reached its cap, they may sue you and your insurance company for the unpaid balance. There are just a select few: Pennsylvania, Michigan, New York, Florida, and New Jersey (which was the worst; I hated NJ’s rules).
Further complicating matters is the fact that no state actually requires individuals to purchase insurance. The majority of people proclaim and espouse this viewpoint everywhere they go. They aren’t. States demand “evidence of financial responsibility” from car owners and drivers, which for the vast majority of us means having insurance. (This issue of health is raised.)
However, if you’re Bill Gates and have enough resources to cover the minimal amount typically required to pay for damages in the event of a car accident (determined by each state, but typically around $50,000 total), you can get a “surety bond” that verifies that you have enough resources on hand to cover the minimal amount required to pay for damages in the case of a car accident. (Note: Only a fool doesn’t have insurance; when I worked for Liberty Mutual, we covered a number of wealthy celebrities and the then-President of the United States.)
INSURANCE POLICY IN NIGERIA
Biggest scam and fraudulent space in Nigeria is "Insurance Space"
Nigerians aren't asking necessary questions about obligations and entitlements from insurance companies.
Ask yourself how is the monies paid to VIO on vehicle insurance working for you? pic.twitter.com/4GMIojxELE
— UUN (@RealUUN) November 10, 2022
Additionally, each state has a different insurance requirement, so go ahead and take a chance with your home’s equity if you don’t want to carry insurance. State-specific surety bond regulations may vary. For the most part, tort states
Some of the coverage options are Medical Costs, Comprehensive, Collision, Roadside Assistance, and Rental Reimbursement. For a detailed explanation of what all of this means, click here. The Elements of a Car Insurance Policy (What Do All Those Numbers Mean?)
All of those options for coverage are available, but the states require you to carry a certain amount. In my state of Ohio, where the minimum coverage requirements had not changed in decades, they were recently raised to 25/50/25. That is, with a $50,000 accident cap, you must have enough liability insurance to pay for $25,000 in property damage coverage and $25,000 in single-person bodily injury liability. Ohio is VERY adamant about expecting you to show that you have good financial judgment.
Every year when we renew the tags on our cars, we have to show proof of insurance. The state randomly inspects 5% of all owners each year (letter in the mail requesting insurance proof). The penalties for driving without insurance in Ohio are almost identical to those for a DUI. Ohio’s Financial Responsibility Act
How come insurance rates in Ohio are, on average, so much lower than those in New Jersey? For instance, the 2012 Kia Sorento I’m paying for has outstanding insurance (insurance agents are informed enough to see the dangers of insufficient insurance): $1 million combined single limit (this shows that there is no typical division for culpability for damage and that my insurance will divide the $1 million award in any way necessary) $500 deductible for accident damage; $250 deductible for comprehensive coverage (theft, window chips, etc.); and maybe rental and roadside assistance (thanks, Flo!). It costs me $75 a month. Given that I have very strict liability restrictions and that I drive a relatively new vehicle, I consider that to.
If you lived in a comparable suburb in New Jersey or Michigan, this insurance would very likely cost substantially more; it might even cost three times as much. Customers in New Jersey and Michigan who I was selling insurance to told me horror stories about the premiums they were used to. So why the difference?
The reality is that insurance prices are influenced by a variety of factors, including the accident history, driving habits, theft rate, damage rate, rules, and credit history, which, when permitted by law, is the single most accurate indicator of potential future loss. If a state is extensively regulated (as New Jersey and Michigan are) while also having relatively high loss rates, the average insurance premium in that state will be very high.
Fortunately, Ohio. The lowest average auto insurance premiums are found in the USA. The average annual cost of insurance is around $1000. This is due to the fact that insurance regulations are typically more lax, insurance laws are strictly upheld, more people have insurance, which lowers the risk that we all assume, and there are fewer auto theft and collision claims.