Do I have to pay for a car insurance policy in full?

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In a nutshell...
  • Minimum coverage is required for potential damage to property
  • Each state sets minimum acceptable amounts to cover personal liability and injury to one or more people in an auto accident
  • Many insurance professionals recommend coverage amounts in the range of 100/300/50

Most car insurance companies are happy to make payment arrangements for your auto insurance policy.

A deposit is always required before a company will issue binder coverage but many car insurance companies accept pretty low deposits to secure coverage – as little as 10 percent of the full premium.

The balance will then be due on regular installments and continue to receive the same benefits as a policyholder who paid in full; provided payments are each made on time.

Should a policyholder miss an installment, the company may accelerate the payment schedule or increase the payment amounts for the rest of the policy term.

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Does it cost more to pay in installments?

Most car insurance companies are permitted to add a service fee to installment payments.

It indeed is cheaper to pay the annual premium in full, but for most Americans, smaller, periodic payments are much easier to manage.

Auto insurance companies often have some flexible payment options including quarterly or semiannual payments.

Service charges will sometimes even be reduced for customers who opt to make more substantial amounts.

Coverage requirements will vary from state to state, so the costs for basic insurance coverage can change dramatically depending on which state you live.

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What is the basic auto insurance coverage?

Each state sets minimum acceptable amounts to cover personal liability and injury to one or more people in an auto accident.

Coverage amounts are written as three numbers, separated by slashes. For example, New York requires a minimum coverage of 20/50/10.

The insured party must carry $20,000 liability coverage for each injured person, with a cap of $50,000 for all injured parties in a single accident.

The final number indicates $10,000 coverage for damaged property. Minimum coverage amounts vary from state to state.

The lowest required auto liability coverage in the nation can be found in:

  • Florida, Louisiana and Oklahoma, 10/20/10
  • Ohio, 12.5/25/7.5
  • California, Delaware, New Jersey, and Pennsylvania all require coverage amounts of 15/30/5

Among the highest minimum coverage amounts in the nation are Alaska and Maine. Both of these states require $50,000 individual and $100,000 multiple person liability coverages, and $25,000 coverage for damaged property.

Are the minimum coverage amounts enough?

Most experts would agree that minimum coverage amounts are not sufficient to cover a severe injury accident.

Once the maximum insurance coverage is reached, the insured party can be held personally responsible for additional costs and sued in civil court.

State minimums have changed very little in the past 30 or 40 years, while hospital care and other medical costs have skyrocketed. The price of the average new car has increased from about $4,000 in 1970 to more than $22,000 today!

Many insurance professionals recommend coverage amounts in the range of 100/300/50.

How much will a car accident cost me?

The National Safety Council compiles and releases information each year on the costs of injury accidents. The NSC estimates that the damages resulting from a motor vehicle-related death are a staggering 1.13 million dollars!

The average cost for a non-fatal disabling injury is $6,160, while the average price for property damaged in an accident is $7,500. Auto insurance is like many other insurance products.

You may never need it, but the one time you do, you’ll be happy you bought the coverage amounts that your insurance agent recommended.

Do I need coverage other than for liability and property damage?

If you lease your vehicle or take out a loan to purchase a car, the dealer or lender will usually require you to add comprehensive and collision coverage to your policy.

Collision covers damages for which the driver is responsible, subject to a deductible amount, usually from $200 to $1,000.

Comprehensive covers damage to your car from events other than collisions, such as storms, fires, and floods. Theft and vandalism are also covered under extensive damage riders, as are broken windows and windshields.

Since the 1970s, some U.S. states have enacted no-fault insurance laws. Motorists pay an additional premium to protect themselves financially from accidents with uninsured drivers.

When was the first auto policy written?

America’s first auto accident was recorded in March 1896 in New York City, two months after the first Duryea brother’s commercial automobile rolled off the assembly line in Chicago.

The victim of this mishap was riding a bicycle and suffered a broken leg. The driver was sent to jail for the night!

Three years later, in 1889, the Travelers Insurance Company sold the first auto insurance policy. According to the U.S. Census Bureau, a $5,000 liability policy was issued to a doctor, Truman Martin, of Buffalo, NY.

At that time, only 4,000 cars were on the road nationwide, making a mishap with a horse or pedestrian far more likely.

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