The difference between UK and US car insurance
On the whole the car insurance industry in the UK and the US follow the same lines, in the UK and the US there is a basic minimum of insurance for all drivers, this will provide financial cover if a driver damages another person or their property whilst driving. In the UK this is known as third party cover and has been a legal requirement for all cars driven on UK roads since 1930. In the US each state sets the basic cover for cars on their roads.
There are three levels of cover in the UK: third party; third party, fire and theft; and comprehensive. Price levels differ for each level of cover and are affected by age, location, value, accident history and excess (deductible). Most insurers in the UK offer no claims discounts, where each claim free year increases the percentage of discount for the insured, this generally tops out at 70% discount after 4years, with some insurers it is possible to protect this after 4 years so the insured will not lose this benefit in the event of a claim. Several other aspects affect the premium: security devices, where the car is parked, annual mileage, and additional users. The cover provided is relatively standard for third party and third party fire and theft but can vary significantly for comprehensive. Generally a comprehensive policy will include, in addition to third party, fire and theft, breakdown cover, a courtesy car and repair costs for a breakdown.
The UK insurance industry has grown massively over the last three decades, with some major companies such as Directline and several specialist insurers such as SAGA for the over 50’s and Sheila’s Wheels for women only. This has lead within the last few years to a growth in insurance comparing internet sites claiming to provide a one fix stop to find the best policy for an individual, Moneysupermarket.com claims to search over 60 companies.
US insurance becomes a little more complicated as each state has its own basic requirements for vehicle insurance, for example California requires $15000 cover for injury/death to an individual and $5000 cover for damage to a property whereas Florida requires $10000 cover for injury and $10000 cover for property and the policy must be issued by a company licensed to sell insurance by Florida. A car on the roads of Florida for 90 days or more per year must purchase cover which complies with Florida’s requirements, hence it is important to know the requirements of the different states you drive through.
Once you have considered the difference in state coverage the insurance industries of the two countries appear to be on a similar footing using similar factors to price policies. Some states do provide low cost insurance schemes aimed at providing insurance for low income drivers who may otherwise drive uninsured: the California Low Cost Automobile Insurance Program. These provide the basic level of insurance required by the state at low costs than commercial insurers.
On the whole the cost of insuring in the two countries is affected in the same way: the more you want the more it costs; If you drive sensibly in a sensible car you should save money; the more security and safety devises your car has the greater the discount; the poorer the district generally the higher the premium; the more you are willing to shell out in case of an accident the lower the cost of your policy.