Car Insurance Basics for H1B visa workers in USA
Car insurance is mandatory and is a big monthly expense in USA.
You will need this handy guide if you are coming to work in USA on a visa like H1B or L1 and planning to buy a car.
|A||Liability||Bodily Injury||Yes. Up-to state minimum values.||Take good amount of cover here. At-least 3 times more than state minimum.|
|Property damage||Yes. Up-to state minimum values.||Take good amount of cover here. At-least 3 times more than state minimum.|
|B||Medical Payments||No||Use your Health insurance in case of accident.|
Usually, the insured amount is too less to make any difference.
|C||Uninsured Motorists||Bodily Injury||No||Covers ONLY your own personal injury. Not the other.|
|Property Damage||No||Covers ONLY your own CAR damage. Not the other.|
|D||Damage to your Auto||Collision Loss||No||Required by Bank if vehicle is on lease or financed. Covers your own vehicle.|
|Other than Collision Loss||No||Required by Bank if vehicle is on lease or financed. Covers your own vehicle.|
|E||Towing and Labor||No||Not required as such. Covered by car makers itself for new cars.|
|F||Optional Transportation Expense (Rental car)||No||Not required – You can use Uber / Lyft/ Waze rides these days if required.|
These are my own opinion on how to save money on monthly car insurance in USA.
These points work well with anybody who is in USA and not specifically to H1B or L1 visa holders though.
I have tried to help visa holders that are new to how USA car insurance works take an informed decision.
Car insurance Premium rates high for H1B?
When you enter USA with no previous credit history, which you will as a new comer, the car insurance rates will almost just be too high to believe!
As an example, Most H1B or L1 visa workers get the car insurance rate quote of about $400 per month when the car’s monthly EMI may just be less than $300 per month.
This is because, the car insurance company considers your no driving history in USA to be equivalent to a teenager in USA. They just consider you a new driver with HIGH risk of getting in to a road accident.
That is why, the immigrant community advises one to get their driving license as soon as they enter USA to start building driving history, even though you do not buy car immediately.
International driving license and history is USEFUL
Car insurance sales agent may NOT tell you this directly but your driving license and history from your own country is useful and can be counted to reduce your insurance premium!
Example: You can use your Indian, Chinese (or any other country’s ) driving license to claim that you have been driving for more than 6 years.
You won’t believe but just using your own country’s driving license will reduce your car insurance monthly premium by HALF! This is true.
The online quote usually does not have the option of giving your driving history from native country. You should call the customer service to claim and get the benefit.
Car insurance premium raised after Accident / Ticket
In USA, any minor (slamming your car door into other car parked next to yours) or major (you hit other car while moving) accident where you are ‘at fault‘ (you were responsible for incident) raises your monthly premium almost immediately.
You can expect the insurance rates to almost double up after the incident.
To add salt to injury, since the accident information is added to your driving record, every car insurance company has access to it and each one of them will have an increased quote waiting for you, if you decide to switch to other provider!
If you think you can cover the cost of your OWN car and its damage, it is better to avoid the insurance all together.
Why I am saying this is, because, insurance company does pay for the damages after an accident, but, eventually recovers them from your pocket by raising your monthly premium. Its your choice.
Example: You own a new Honda CRV (bought for $24k).
- Worst case – Total Loss: Maximum total loss i.e. 24K – You are ‘At Fault‘ . With liability insurance, the other party’s claim will be paid by insurance company and you will need to pay for buying your OWN new car to replace your total loss car.
- Average case – Repairable Dents: Third party car damage will be covered by Liability again. You will be required to pay for your own car’s fixes. You can choose to shop around and even get it done by local garage as their rates are much lower than car manufacturer’s own service centers. You won’t believe but 90% of the car dealerships also just outsource the collision work to those local garage themselves!
- Best case – Glass Damage: In most cases, you might have opted for higher deductible for glass damage in the rage of $500 per instance. If you shop around, the total cost of after market glass replacements only cost around $500-600 anyway including labor!
DUI – Drinking Under Influence ticket can affect H1B visa
Please be aware that DUI ticket (normally called challan in India) given for driving under influence of drugs of alcohol beyond approved limits (varies by state law) is considered a very serious offence.
If you are caught under DUI, your H1B or L1 visa can be denied on your next extension by immigration officer or at US embassy interview.
So, please be careful and do NOT drive after drinking alcohol. Also, your chances of Green card approval also reduce drastically with DUI ticket.
You may well disagree and you are most welcome to share your views and I will be happy to correct myself.