Car Insurance in Los Angeles and Canada vs USA

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Car Insurance in Los Angeles and Canada vs USA

There is definitely a lot of disparity when it comes to car insurance prices in US and Canada. The factors that insurance companies use in both countries vary and could be the reason behind their rate calculation. Both neighboring countries do require mandatory car insurance and liability coverage. There are major private insurers in both countries and some sell in both. If you have a policy with such a company then you may stay with the same insurer when you move. However, you may pay a higher price for car insurance in Canada than in the US. In both places, your driver record along with vehicle profile and location will affect your rates. If your driver record has many violations, at-fault accidents etc. then it could increase your rates, be it in Canada or US.

Surprisingly certain states in the US do not need you to carry car insurance by law. However, you have to provide proof of financial responsibility such as a cash deposit with the transportation department, file a surety bond or self-insurance with that state. This will pay for the damages when you are in a collision.

How Does Car Insurance Work In US?

In US car insurance protects passengers and drivers against financial losses in a collision. Though most states have made car insurance mandatory, the amount of coverage required may vary for each state. Liability coverage is part of mandatory car insurance and offers you protection from expenses for property damage, injuries etc. Some states follow the no-fault system for auto insurance. These include Michigan, Massachusetts, New Jersey, New York, Utah, North Dakota, Hawaii, Kansas, Kentucky, Pennsylvania, Minnesota and Florida. Also, no-fault insurance type differs in each state and some may require that you have Personal Injury Protection. In 3 states you may choose to either have no-fault insurance coverage or the tort coverage. These are the states of Kentucky, Pennsylvania, and New Jersey.

What Is Included In Car Liability Coverage In US?

Most insurance policies have 3 main components for auto liability coverage. These include bodily injury coverage per person, per accident and property damage per accident. Usually, there are limits for each of these components and it will specify on your policy; an example would be 10/25/15. This means that when you are in a collision with another vehicle that injures many passengers then your liability coverage would pay for up to $10000 per person for bodily injuries. But this amount cannot exceed $25000 for total injury claim for the incident. And you may claim up to $15000 for property damage due to the collision.

How Does Car Insurance Work In Canada?

All motorists need to have car insurance with mandatory coverage to operate a vehicle in Canada by law. The car insurance policy offers protection to the driver, owner, pedestrians, passengers and the third party injured in a collision as well as property damage. Your insurance contract outlines your coverage limits, perils, exclusions etc. and you pay premiums either monthly or annually.

Difference Between Canadian And US Car Insurance?

Almost all Canadian provinces have a no-fault insurance system whereas only 12 states in the US follow no-fault insurance system. Out of those 12, there are three states that have a choice between tort and no-fault insurance system.

In certain Canadian provinces, the government pays for injury claims and not the insurance company; an example is Quebec.

It is mandatory to have only Liability coverage in the US whereas in Canada you must carry more coverage. If you finance or lease your car in the US  your lender may ask you to buy full coverage. This will include collision and comprehensive too. In Canada, mandatory coverage must include accident benefits, uninsured motorist benefits and DC-PD (Direct Compensation Property Damage).

There are only private insurance companies in the US and no state program for car insurance. In Canada, certain provinces do have government insurance programs as well as private insurers.

Why Does Car Insurance Cost More In Canada Than In The U.S?

It is true that car insurance may cost more in Canada than in the US and particularly the cost of auto insurance in Ontario is most expensive. The coverage limit and options do vary with each state and you only need liability insurance as mandatory. However, in Canada, you need to purchase more coverage such as uninsured benefits, DC-PD and accident benefits as mandatory. This could be a major reason for the price difference. In the US, payout limits are less than Canada and the coverage is optional. In Canada, you pay more but you also get more protection. Also, as per the city you live in, the theft rating and traffic congestion, daily commuting distance, rates could differ.

LA frequently tops lists for worst traffic cities in America, and also has relatively high insurance premiums.

So how come car insurance in Los Angeles costs more, and what can you do to find a cheaper premium?

What impacts the cost of Los Angeles car insurance?

While LA isn’t right at the top of the list when it comes to premiums, residents will still likely pay more than the average. 

According to a study by Nerdwallet, Los Angeles is in the top 25 cities in America for premiums.Other studies paint a worse picture. According to figures reported in USA Today, LA is the fourth most expensive city for car insurance, with rates 25 percent above the national average. 

So what causes rates to be higher? Before getting into that, keep in mind that there’s more to your auto insurance premium than just where you live. 

Your car, your driving history, and claim history will all play a part. But your premium can change just by changing your zip code within the same city. So location does have an impact, too.

Thankfully due to the regulations for car insurance in California, other factors like your credit score will not affect your premiums.

The importance of population density

As a general rule, cities will have higher premiums than more rural areas. More people means more drivers. More drivers means more cars on the road at the same time, which increases the chances of a collision. 
A city the size of LA only intensifies this. Not only is Los Angeles home to the second largest population in America (after New York),  but the LA-Long Beach-Anaheim area is also the most densely populated – and a large slice of that population drives a lot. 

Within that area, 75 percent drive to work alone, and people travel a total of 279 million miles every day.This is, in part why LA is so high on the Tom Tom global traffic index. At number 12 on the list Los Angeles is the highest of any U.S. city.

Frequency of claims

There is data to suggest more traffic means more collisions. A study by Quote Wizard put LA as having the third highest accident rate of U.S. cities. 

Whether it’s the traffic or just bad luck, people in Los Angeles make auto insurance claims more often than almost any other area.

According to an Allstate study, LA ranked 194 out of 200 cities for frequency of auto claims – with people calling their insurers every 5.5 years compared to a national average. 

Even taking the wider Los Angles-Long Beach-Anaheim area into consideration, it’s still below average, clocking in at 7 years compared to the U.S. average of ten years.

Who has the cheapest car insurance in Los Angeles?

The short answer is “it depends.” A lot of companies operate in California, and there will be differences in how they determine their premiums.

Add to that all the unique characteristics that go into your premium: your driving experience, claim history, vehicle type, etc and you can see that there isn’t a one size fits all answer. 

But this doesn’t mean you just have to accept the rate you’re paying now. There are a number of things you can do to help get your premium down.

How to get cheaper car insurance in LA

1. Shop around

This is key to making sure you pay the cheapest insurance in Los Angeles available to you.

Shopping around lets you see who will offer you what at what rate, as well as give you a better sense of the kind of coverage you need.

Of course, shopping around isn’t fun – we’re talking about buying insurance after all.

It doesn’t have to be complicated and time-consuming. You don’t have to do all the legwork yourself. Look for services that can provide you with quotes from different providers at the same time.

The Cover mobile app will get you a quote in minutes. All you need to do is answer a few short questions and the app will scan over 30 different providers to get you the best rate (You can download it from the App Store or Google Play store for free).

And If you’re wondering how to switch car insurance companies, don’t be put off –  it’s more straightforward than you think.

2. Reduce coverage on older cars

Be smart about what types of car insurance you need. Once your car reaches a certain age, or gets enough miles on the clock, the depreciation means having collision or comprehensive insurance isn’t really worth it.

If you have an older car (sidenote: that’s a way to potentially save money on insurance) then consider the trade off between liability vs full coverage as a way of potentially reducing costs.

3. Raise your deductible

There’s a direct relationship between higher premiums and a lower deductible. This makes it a straightforward route to lower auto insurance costs.

Since the data suggests insurance claims happen more often in LA, keep in mind that if you do get in an accident the money you might have saved from lower premiums would quickly be offset by the higher deductible.

4. Drive less, drive safe

Your own driving habits do play a part. The less you drive the less time you spend on the road to be in an accident, so you are less of a risk.

In LA, driving less might not be completely feasible but if you are able to cut down miles, for example by car-pooling, it could help you get your rate down.

When you are in your car, if you need any extra incentive to drive safely remember that tickets and insurance claims can also push up your premiums.

5. Bundle insurance

If you need other types of insurance, such as renters insurance or homeowners insurance, getting them from the same insurer as your auto insurance could lower costs overall.