The US System
The biggest insurance companies, Allstate, Progressive, Geico and State Farm, offer rates similar to those of the German system. They usually distinguish between ‘standard cover’ and ‘extra risks cover’, the basic insurance package and one that covers a greater number of risks. Depending on the rate, there is often the option of getting legal protection, passenger insurance etc. Furthermore, US insurance companies also make a distinction between bodily injury and material damage, and the insurance holder can choose what he wants to be covered to which extent. Therefore, one is not obligated to first insure damage to third parties and then damage to oneself.
The general estimate of the insured sum is in no way comparable to the standards common in Germany. Especially considering the huge claims for compensation made in the USA, one will understand that what with such broad coverage, premiums are accordingly high. Recurring talks have been led about introducing tags, valid for the duration of one year, which insurance companies should hand out to identify insured road users.
Compulsory / Mandatory State Insurance
When one reads about the U.S. motor vehicle insurance system, one encounters the terms “compulsory state insurance” or “mandatory state insurance” more than once. This labeling already says something about the regulations of motor vehicle insurance here: In most states, at least basic car insurance, which in its main features is similar to the German one, is compulsory. This obligatory insurance (third-party risk insurance) covers, like the German car liability insurance, damage done to third parties up to the amount of 50.000 U.S. dollars. This is noteworthy especially since costs for accidents involving bodily injury, in which a person loses their life or suffers from consequential sanitary damage can easily go over the one million margin – it is not for nothing that the German law prescribes obligatory insurance with a coverage of at least 7.5 million Euros. Consequently, this means that in the USA, where good medical care is expensive, everything which cannot be covered by those 50.000 dollars needs to be paid out of one’s own pocket, which of course someone who causes an accident will not always do willingly and sometimes not even voluntarily. This is how the many lawsuits concerning bodily injury, in which high amounts of indemnification are usually agreed upon, can be explained.If one cannot bring proof of insurance as a car owner, a fine of over 500 dollars impends; if the offence is repeated, the fine doubles and one loses one’s driver license or, in extreme cases, a custodial sentence is decided upon. Even so, statistics show that a good 15% of drivers are not insured. Unlike in Germany, in fact, when buying and registering a car, proof of insurance must not necessarily be provided. This leads to those people who cannot afford the high premiums driving without insurance protection.
In the two states New Hampshire and Wisconsin there is no obligation to have insurance. Because of the regulation in these states, but also because of the large number of non-insured drivers in other states, it has been suggested to draw up a database which gathers together all insured and non-insured drivers. Other suggestions have included setting up an unsatisfied judgment fund, which should help with bodily injury if the person causing the accident was not insured or was insured insufficiently.
No Claims Bonus and other discounts
Just like in the German system, the insurance holder is rewarded for getting through traffic without having caused any accidents themselves. However, unlike in the German system, this discount can quickly be removed, if, for instance, small damage has to be paid for by the insurance company. If one wants to prevent this, one has to pay higher premiums in order to have the insurance company pay for small damage while leaving the no-claims bonus intact. This regulation is comparable to the German discount saver regulation.Often, the bonus is personalized, meaning it is only valid for the insurance holder themselves. Other bonuses include premium discounts for experienced drivers, as well as a discount when one installs an alarm system. A discount is also available when one can prove attending regular driving lessons, such as safe driving training or training for defensive driving. Also, discounts are awarded if for instance, parents of young adults up to 25 years of age are members of the same insurance company. Furthermore, having repair jobs done at authorized repairers can at least lead to a more lenient removal of discount points.
