Is Car Insurance a Waste of Money? (The Truth – Nobody Is Talking About!)


Is Car Insurance a Waste of Money

Do you know if car insurance is a waste of money? this is one of the questions our readers ask a lot. Well, we´ve got you covered.

Car insurance can be pricey. Because of that, you’re not alone in wondering whether it’s a waste of money. So, we’re going to clear everything up for you!

By the end, you’ll know:

  • Whether car insurance is a waste of money
  • Why car insurance is a legal requirement
  • How much car insurance is mandatory
  • How to reduce your insurance rates

Excited? We bet you are! Without further ado, let’s get into the details.

Is Car Insurance a Waste of Money? (Spoiler: No!)

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To put it bluntly, no, car insurance is definitely not a waste of money! Yes, we know it can be expensive, but it’s mandatory in the United States.

All car insurance laws are enforced and passed at a state level. In every state except for New Hampshire, all drivers must carry an active car insurance cover.

Read also: How Much Does Car Insurance Go Down After 1 Year with No Claims?

But Why is Car Insurance a Legal Requirement?

Good question; it’s basically all about liability! In other words, your responsibility for any damage caused.

Even though you can take out optional collision and comprehensive coverage to keep your vehicle safe, the mandatory coverage is bodily injury and damage to property.

Both of these give financial relief to the victims of any damage caused by you in an accident.

In New Hampshire, you can get away without this coverage as long as you can prove you’re able to pay for damages that you could cause.

Although, it’s worth mentioning here that it’s wise to take out insurance anyway!

Read also: The 4 Best RV Insurance for Full-Timers: A Dollar-Saving Guide

Okay, How Much Car Insurance is Mandatory?

If you drive on public roads and your vehicle is registered, you must meet your state’s minimum coverage.

As we mentioned earlier, the state regulates car insurance laws, so each one has different minimums.

You can see from the table below that some states request far more coverage than others.

But, generally speaking, it’s no-fault states that require higher cover levels because you must file a bodily injury claim after an accident.

Additionally, you’ll need PIP (Personal Injury Protection) in no-fault states.

Look at the non-exhaustive table below to see the finer details on minimum coverages:

State The Minimum Insurance Coverage
Alabama, Arkansas, Indiana, Mississippi Liability: Bodily injury ($25,000 pp, $50,000 for each accident) and damage to property cover ($25,000 for each accident)
AlaskaLiability: Bodily injury ($50,000 pp, $100,000 for each accident) and property damage ($25,000 for each accident)
Arizona, Idaho, ColoradoLiability: Bodily injury ($25,000 pp, $50,000 for each accident) and property damage ($15,000 for each accident)
CaliforniaLiability: Bodily injury ($15,000 pp, $30,000 for each accident) and property damage ($5,000 for each accident)
PennsylvaniaLiability: Bodily injury ($15,000 pp, $30,000 for each accident), and property damage ($5,000 for each accident), and first-party medical benefit ($5,000 pp)
Connecticut, MissouriLiability: Bodily injury ($25,000 pp, $50,000 for each accident) and property damage ($25,000 for each accident) Uninsured or Underinsured Motorist: Bodily injury ($25,000 pp, $50,000 for each accident)
DelawareLiability: Bodily injury ($25,000 pp, $50K for each accident) and property damage ($10,000 for each accident) Personal Injury Protection (PIP): $15,000 pp, $30,000 for each accident
FloridaPIP: $10,000 pp Property Damage Liability: $10,000 for each accident
Georgia, MontanaLiability: Bodily injury ($25,000 pp, $50K for each accident) and property damage ($20,000 for each accident)
HawaiiLiability: Bodily injury ($20,000 pp, $40,000 for each accident) and property damage ($10,000 for each accident) PIP: $10,000 pp
Illinois, NebraskaLiability: Bodily injury ($25,000 pp, $50K for each accident) and property damage ($20,000 ($25,000 in Nebraska) for each accident) Uninsured/Underinsured Motorist: Bodily injury ($25,000 pp, $50,000 for each accident)
IowaLiability: Bodily injury ($20,000 pp, $40,000 for each accident) and property damage ($15,000 for each accident)
KansasLiability: Bodily injury ($25,000 pp, $50,000 for each accident) and property damage ($25,000 for each accident) Uninsured/Underinsured Motorist: Bodily injury ($25,000 pp, $50,000 for each accident) PIP: $900 per month income loss for a year, $4,500 medical expense pp, $25 per day at-home services, $2,000 funeral expense pp, and $4,500 rehab expense pp
KentuckyLiability: Bodily injury ($25,000 pp, $50,000 for each accident) and property damage ($25,000 for each accident) PIP: $10,000 pp
MinnesotaLiability: Bodily injury ($30,000 pp, $60,000 for each accident) and property damage ($10,000 for each accident) Uninsured/Underinsured Motorist: Bodily injury ($25,000 pp, $50,000 for each accident)
MaineLiability: Bodily injury ($50,000 pp, $100,000 for each accident) and property damage ($25,000 for each accident) Uninsured/Underinsured Motorist: Bodily injury ($50,000 pp, $100,000 for each accident) Medical Payments: $2,000 pp
MassachusettsLiability: Bodily injury ($20,000 pp, $40,000 for each accident) and property damage ($5,000 for each accident) Uninsured/Underinsured Motorist: Bodily injury ($20,000 pp, $40,000 for each accident) PIP: $8,000 pp

Our Top 5 Tips For Reducing Your Car Insurance Rates

We’ve established that car insurance is not a waste of money. However, that doesn’t mean you should be paying through the nose for it.

Gander at our top 5 tips below to see how much you could save:

  1. Go Discount Hunting — Arguably, looking for discounts is the easiest way to reduce your insurance rates. Insurers usually offer a variety of discount schemes. The only catch is you need to be eligible! 
  2. Compare Providers — Before you renew or take out another insurance policy, use comparison sites to shop around for the best value.
  3. Make Sure Your Car’s Make and Model Has Low Insurance Costs — If you’re in the market for a new vehicle, try to purchase one that fits your insurance budget. Unfortunately, most people forget this part when they buy a car!
  4. Update Your Insurance Policy Twice Per Annum — Make sure you update your insurance policy twice a year. That way, you can discover the best rates from other carriers.
  5. Increase Credit Score — Improving your score can help lower your insurance. However, it takes a very long time.

Read also: When Does Gap Insurance Not Pay (9 True Reasons)

The Bottom Line

Is car insurance a waste of money? No! But you can lower your rates, as we’ve just discussed. 

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References

https://www.thezebra.com/auto-insurance/policies/why-is-car-insurance-mandatory

Marissa K.

Hi! I'm Marissa. A personal finance nerd, content writer, and Managing Editor. I'm here to bring you all the latest cool ways to save, make and invest extra money. So, helping you to live your dream life!

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