Insurance of Cheapest states for young drivers

Even a no-frills vehicle represents a huge expense for the 4 million or so Americans working a minimum-wage job.
But it represents a bigger challenge in some places than in others. Young drivers in Rhode Island will work nearly four times as long as their counterparts in Illinois to buy the legally required state-minimum liability coverage, according to a CarInsurance.com analysis.
We ranked states by the number of hours needed to buy coverage, comparing their cheapest car insurance for 18-year-olds with their minimum wage.
This is as cheap as insurance gets, and there are few trade-offs available to save further. For example, you can’t reduce your limits below the minimum amounts. And you can’t raise your deductible. There are no deductibles on liability insurance.

Where you live matters – a lot

The Bureau of Labor Statistics says the average hourly wage in the U.S. was $24.17 in December 2013. The average annual outlay on liability car insurance, says the Insurance Information Institute, was $492 as of 2011.
The means an average worker could buy a year of liability coverage with about 20 hours of work.
But consider an 18-year-old working an entry-level job. The average state minimum wage in 2014 is just $7.60 an hour. And teenagers pay much more for insurance: The average price of a year of bare-bones coverage was $841, using rates gathered from the national carriers in CarInsurance.com’s online quotes tool.
At those averages, a year of state minimum liability insurance would require 111 hours of work.
Because both wages and car insurance rates swing dramatically, we looked at affordability by comparing the cost of legal-minimum auto insurance with each state’s minimum wage. Young drivers in Rhode Island had it worst, with 196 hours required to buy the cheapest liability policy we found. A young driver finds not only much cheaper insurance in Illinois but higher wages as well; a year of liability insurance takes just 56 hours of work.

The cheapest states for young drivers

These are best-case scenario numbers.
We compared rates using the state’s cheapest ZIP code for a young driver with clean record, good credit and previous insurance on a parent’s policy. We chose the least expensive rate we found. Unless you’re 18, male, a resident of the particular addresses we used and proud owner of a 1997 Ford Taurus, your quotes probably won’t exactly match ours, which are only a snapshot of available rates.
They are, however, a good indicator of the financial hurdle confronting any teenager who depends on his own car to commute to school or work.

What an 18-year-old pays for state-minimum liability

Rank	State	ZIP code	Annual liability cost	Minimum wage	Hours to buy
1	Illinois	61761	$459	$8.25	56
2	North Carolina	28778	$419	$7.25	58
3	Iowa	50010	$419	$7.25	58
4	Nevada	89427	$492	$8.25	60
5	Missouri	65101	$458	$7.50	61
6	Indiana	47905	$462	$7.25	64
7	New Mexico	88310	$557	$7.50	74
8	California	93441	$602	$8.00	75
9	Montana	59602	$625	$7.90	79
10	New York	14580	$669	$8.00	84
11	Connecticut	06498	$728	$8.70	84
12	Pennsylvania	16823	$611	$7.25	84
13	Washington	99163	$795	$9.32	85
14	Kansas	67401	$625	$7.25	86
15	Nebraska	68504	$662	$7.25	91
16	Vermont	05446	$826	$8.73	95
17	Mississippi	39759	$688	$7.25	95
18	Florida	32669	$755	$7.93	95
19	Tennessee	37686	$721	$7.25	99
20	Wisconsin	53081	$727	$7.25	100
21	Wyoming	82007	$732	$7.25	101
22	Arizona	86426	$805	$7.90	102
23	Arkansas	72768	$751	$7.25	104
24	Alabama	36543	$759	$7.25	105
25	Georgia	31601	$763	$7.25	105
26	Virginia	22652	$787	$7.25	109
27	Idaho	83712	$791	$7.25	109
28	Texas	76306	$802	$7.25	111
29	Louisiana	71021	$811	$7.25	112
30	Colorado	80525	$916	$8.00	114
31	Oregon	97330	$1,060	$9.10	116
32	Utah	84772	$848	$7.25	117
33	Minnesota	56003	$939	$7.25	130
34	South Carolina	29692	$943	$7.25	130
35	Maine	04105	$1,039	$7.50	139
36	Oklahoma	74003	$1,019	$7.25	141
37	Maryland	21780	$1,049	$7.25	145
38	Michigan	49866	$1,204	$7.40	163
39	Ohio	44833	$1,330	$7.95	167
40	Kentucky	41075	$1,227	$7.25	169
41	New Hampshire	03303	$1,261	$7.25	174
42	New Jersey	07933	$1,446	$8.25	175
43	Delaware	19939	$1,327	$7.25	183
44	West Virginia	25427	$1,370	$7.25	189
45	Rhode Island	02842	$1,569	$8.00	196
*	Alaska	99829		$7.75
*	Hawaii	96722		$7.25
*	Massachusetts	01258		$8.00
*	North Dakota	58205		$7.25
*	South Dakota	57069		$7.25
*	Washington, D.C.	20006		$8.25
	National average		$841	$7.60	111

* Data missing or unavailable at time of publication
** States that have no minimum wage or a minimum wage lower than the federal wage are displayed at the federal minimum.

What you can do

The cost of liability insurance has more to do with the driver than the car. (The insurance company isn’t going to fix your car, just the person’s you hit.) In your search for affordable auto insurance, these are the factors you have some control over:

• Your driving record: More than one violation or accident is going to hurt.
• Your credit: If it’s dismal, you’re seen as a bigger risk of a claim and thus charged more in many states.
• Your mileage: The less you drive, the less risk of your hitting someone.
• Your insurance history: If you’ve let your policy lapse, even for a few days, you’ll pay about 5 percent more than you would have otherwise, according to Insurance.com.
• Your insurance company: No two insurers offer identical rates, and even on state-minimum policies, premiums can differ by hundreds of dollars a year.

Insurers do look at your car, and if it has a significantly higher rate of claims than most (because, say, it’s driven mostly by young drivers), your liability rates will reflect that risk.

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How Much Car Insurance Should You Buy?

Buying car insurance is a lot like buying a car: It's often difficult to know whether you've gotten a good deal.

Often we reassure ourselves that there is little difference, that full coverage is full coverage, and we've been with our agent for, well, forever, and doesn't that count for something?
Ask yourself if it counts this much: $1,102.
A new CarInsurance.com study shows that if you're a driver under age 25, that's the difference in annual premiums you can expect to find between the lowest auto insurance quote you're offered and the next-lowest. The differences shrink a little as you get older but remain shocking: Even among those over 65, the spread is $478.
How much money are you leaving on the table by not shopping around?

Differences among car insurance quotes

CarInsurance.com delivers more than 1 million comparison quotes a year, most of them online. Our online quote tool delivers up to four quotes instantly.
Our customers come with all kinds of insurance needs, but for comparison's sake, we looked only at single drivers insuring a single car with full coverage and no violations on their records. Then we calculated how much they could save simply by choosing between the two best rates.
Across all age ranges, the savings were a consistent 30% or more.
Why would car insurance rates vary so much?

Comparing average annual insurance premiums
Age	Lowest quote	Next-lowest quote	Difference	Savings
16 to 24	$3,152	$4,254	$1,102	35%
25 to 34	$1,938	$2,566	$628	32%
35 to 44	$1,818	$2,362	$544	30%
45 to 54	$1,614	$2,089	$475	29%
55 to 64	$1,446	$1,902	$456	32%
65 and over	$1,461	$1,939	$478	33%

Every insurer decides on its own how much risk to take, and how much to charge for it. Each insurer must file rate plans in states where it does business, outlining how it intends to price those risks.
In Washington state, for example, one insurer gives a discount to drivers who shop more than seven days before their policies expire. It penalizes new customers who carried less than a hefty amount of liability coverage with their previous insurers. And it has 87 separate ZIP code buckets in Washington state alone; the cheapest ZIP code is priced hundreds of dollars less for an otherwise identical policy.
Younger drivers get dinged for not having attributes considered "less risky." Most don't own homes, or have a profession, or a credit record. And insurers penalize them greatly for their age and driving record, gambling that the huge premiums they take in make up for the much greater number of claims.
It's hardly an exact science, though. Some insurers charge too much; others, not enough. And the difference between them, at least for those under 25, comes to $1,102 a year - or $92 a month.
The differences only grow as your policy becomes more complicated by additional drivers, claims and speeding tickets.

Overlooked auto insurance savings

$92 a month is a lot of money to most of us. It's a cable or cell-phone bill, maybe enough to pay the gas and lights.
But if you're someone under 25, an age range that earned a gross monthly median income in 2009 of $898, according to the Census Bureau, it's a fortune.
When the wolf is at the door, we tend to concentrate on small savings, such as bypassing one gas station for another down the block that's 2 cents cheaper, or buying cereal that comes in a bag rather than a box.
But it's the big moves that pay off: Get a second job. Or a roommate or move back home.

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Halloween pranks covered by car insurance

If you have comprehensive coverage, don't get spooked if your car is involved in Halloween high jinks.  
Comprehensive insurance covers many common vehicular pranks, which are typically considered acts of vandalism. It also covers theft, fire, animal strikes, flying objects and damage resulting from flooding, hail and wind storms. But when your car is the target of ghoulish behavior, or you have a Halloween mishap, here's what you need to know about car insurance:

1.Egged vehicle. If your car's paint job is damaged by the volatile compounds contained in eggs, you must have comprehensive insurance to file a claim.
If you get to the car in time, you might try to wash the egg off and save yourself from filing a claim.  If the damage is done, then don't be surprised if your comprehensive coverage won't cover a full-vehicle paint job if only one area has been damaged.  The damaged area should receive new paint, which the painters will try to blend in with the rest of the car's older paint. 
And if you have a custom paint job, it may not be covered unless you have custom parts and equipment coverage as part of your policy.

2.Broken car window. Shattered windows are also covered under your comprehensive coverage.  In Florida, comprehensive claims for windshields are exempt from deductible payments.  Kentucky and South Carolina car insurance companies waive the deductible for all glass replacement claims. In all other states, the deductible will normally be due if you make a glass claim unless you chose a zero deductible for glass coverage.

3.Sugar in the gas tank. Scientists have debunked the myth that sugar in the gas tank causes significant damage. The sugar should be caught by filters, but if it does get through it could clog fuel injectors.  You may need to take the car to a mechanic to clean out the fuel tank and lines, which should be covered under comprehensive insurance coverage.

4.Halloween decoration causes dents and dings. If an inflatable pumpkin breaks loose, rolls down the street and crashes into your car, causing a dent -- that's a collision claim. However, if a Halloween decoration lets loose due to gusting wind, becomes a flying missile and falls on your vehicle causing damage, it would be a comprehensive claim. 

5.Slashed tires. Tire damage is also covered by comprehensive coverage.  Your car insurance company will take into account how much your tires have depreciated.  You won’t end up getting paid for a set of new shoes if you're replacing five-year-old tires with 50,000 miles on them.

6.Pumpkin chunkin’.  If a pumpkin is thrown at your vehicle and damages it, then this would be considered a flying missile and covered under your comprehensive coverage. 

7.Black cat crosses your path. If you hit a cat, or any other animal, and it damages your vehicle, then this would be an animal strike and covered under your comprehensive coverage.  However, if a black cat runs across the road, spooks you and causes you to crash into a tree, that would be covered by collision.

8.Trunk ‘n Treat.  Dressing up for Halloween doesn’t have to be left to pedestrians, cars can get in the act too – and accidents can happen that lead to claims. For example, if a chain you used to decorate a tombstone comes loose from your tricked-out trunk and collides with your vehicle causing a scratch or dent, collision would cover it.  If a prop attached to your vehicle comes loose and damages someone else's car, then your property damage liability coverage would cover it.

9.Car gets toilet papered or wrapped in Saran wrap. These pranks may seem relatively harmless, until you undo the TP or clear wrap and find the perpetrator scratched your car.  Insurers will typically consider such incidents as vandalism and cover it under your comprehensive coverage. 

10.Car tipped over.  Car tipping of sub-compact cars -- usually Smart cars -- has happened every few months in certain locales.  Halloween is likely another night to target these light-weight vehicles.  If it happens to yours, know now it is considered vandalism and would be covered as a comprehensive claim.  If the tipper only manages to push your car into something, like a fence, it would instead be a collision claim for colliding with something.

What to consider before filing a claim for Halloween damage

No matter what type of Halloween incident or prank you suffer, it's wise to save your car insurance claims for the big things.  If the damage to your vehicle is minimal, get an estimate for repairs to see if it's less than your deductible amount to repair.  If it is, skip making a claim. Instead, pay out-of-pocket or find the responsible party and make him pay.
If the repair costs are way over your deductible, go ahead and make the claim.  One comprehensive claim doesn't typically raise your rates.  However, if you have multiple claims -- of any type -- it can cause a rate increase; or, your car insurance company may even find you too much of a risk to renew your policy at the end of its term. 
Car insurance companies typically require vandalism claims to be accompanied by a police report.  So, if it turns out someone you know did the damage, the individual may be busted by the police and pursued by your insurance company for any money it paid out in claims.

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Do you know? Minimum car insurance requirements

Most states require you have car insurance and have laws that outline the minimum level of coverage you must buy.
However, the minimum limits your state requires may not necessarily be adequate. A car accident can cost far more than the limits mandated by most states. The Insurance Information Institute recommends you carry at least $100,000 of bodily injury protection per person and $300,000 per accident (known as 100/300).

How to read auto insurance liability limits

Here's how to read auto insurance liability minimums.

1.    First number: Bodily injury liability maximum for one person injured in an accident.

2.    Second number: Bodily injury liability maximum for all injuries in one accident.

3.    Third number: Property damage liability maximum for one accident.

For example, if you live in New York, the minimum liability limits are $25,000 for injury liability for one person, $50,000 for all injuries and $10,000 for property damage in an accident (written as 25/50/10). Plus, New York requires you to have personal injury protection (PIP) and uninsured motorist bodily injury coverage (UM).

UM, what?

Here's your guide to the car insurance acronyms in the chart at the right,

• UM = Uninsured motorist coverage.
• UIM = Under insured motorist coverage.
• UM BI: Uninsured motorist bodily injury coverage.
• UMPD: Uninsured motorist property damage coverage.
• PIP: Personal injury protection.
• PPI: Property protection insurance (Michigan).
• BI liability: Bodily injury liability.

Uninsured and under insured motorist coverage

A total of 21 states, plus the District of Columbia, require either uninsured motorist (UM) bodily injury coverage by itself or both UM coverage and under insured motorist bodily injury (UIM) coverage. 
Uninsured motorist bodily injury covers medical expenses if you or your passengers are injured by an uninsured driver. Under insured motorist is triggered when the at-fault party is insured but his insurance limits are too low to pay all of your medical bills.
Uninsured motorist property damage (UMPD) covers damage your car received from an accident with an at-fault uninsured driver.  UMPD is required in only eight states. 

What is no-fault car insurance?

If your state has a "no-fault" auto insurance law, your auto insurance policy must pay medical bills for you and your passengers regardless of who caused the accident.
Your no-fault coverage -- which is your personal injury protection (PIP) -- may come with a copayment and/or deductible.  No-fault coverage applies only to bodily injury claims. If you also have car damage, you would make a claim for the damage against the at-fault party’s property damage liability coverage.

No-fault laws are intended to keep insurance fraud down.

No-fault auto insurance states

Florida

Hawaii

Kansas

Kentucky

Massachusetts

Michigan

Minnesota

New Jersey

New York

North Dakota

Pennsylvania

Utah

Puerto Rico*

Source: Insurance Information Institute. *Puerto Rico is a U.S. territory.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deciphering auto insurance liability across state lines

If you hold the minimum automobile insurance required in your state and are involved in an accident in another state that requires higher minimum coverage or other coverage (such as personal injury protection), typically your policy will automatically increase to meet that state's minimum coverage requirements.
For example, if you're a Connecticut driver (where minimum liability coverage is $20,000 of bodily injury protection per person, $40,000 of bodily injury protection per accident and $10,000 of property damage per accident, or 20/40/10, as it's often called) and are involved in an accident in New York (which requires 25/50/10 of liability coverage), your auto insurance will automatically extend to meet New York's requirements. This boost can be helpful, especially when you cause a large amount of property damage.

Some states restrict the ability of their citizens to sue one another for pain and suffering after a car accident. Puerto Rico (a U.S. territory) and 12 states have "no-fault" laws. These laws mean that your car insurance must pay for bodily injury damages no matter who's at fault in an accident. However, these same states allow their citizens to litigate against folks from other states after a car accident.
For example, you are limited in your ability to sue for damages if you live in Pennsylvania. When buying your auto coverage you have two choices of liability: "full tort" or "limited tort." If you choose "limited tort," you will pay less in premiums but you won't be able to sue another Pennsylvanian for pain and suffering unless you're seriously injured and your medical bills exceed a specified minimum amount. What constitutes a serious injury is outlined in your car insurance policy. If you choose full tort, your premiums will be more but you will be able to sue no matter the amount of your damages.
Throw out the rulebook if someone from another state crashes into you. Even if you have Pennsylvania "limited tort," you'll be able seek compensation for pain and suffering in the court system if someone from outside Pennsylvania crashes into you.

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