H1B Car Insurance Basics, Liability, Collision, Rental Car

Car insurance basics for h1b visa. Only Liability insurance is mandatory at state minimum values. Save money on montly premium by not buying optional cover.

Written by Anil Gupta
  By Anil Gupta    Updated  2 Mar, 20

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.

We explain the common terms that you will find on insurance company quotes like Geico, Progressive, Amica, Liberty Mutual and more.

#1 Liability

Car liability insurance is mandatory in USA. You will need to show proof of insurance to cover damage to other vehicles before you can get your car registration.

Liability has two sub-categories:

  1. Bodily Injury
  2. Property Damage

Each state in USA has different minimum required level for each part of Liability coverage. I recommend to get take good amount of cover which is at-least 3 times more than state minimum.

You can expect to get third party liability coverage for 1 car with 2 drivers at about $40 per month if you have good driving history. Getting a driving license quickly after landing in USA is part of my to-do list for newcomers to USA.


#2 Medical Payments

Medical payments car insurance pays for your own injuries in you get into an accident on US roads while driving your car. The medical coverage here is mostly too low to make any significant difference.

Medical payments insurance is NOT mandatory. You can choose to skip it.

I suggest to use your Health insurance coverage in case of need as that would have more comprehensive coverage.


#3 Uninsured Motorists

If you get hit by a car which was driven by a person who had no insurance, you will get covered by your own insurance with ‘Uninsured Motorists hit; coverage. The probability of getting hit is really low and that too by someone who has a card with no liability insurance is extremely low.

Almost all cars on US roads have at-least liability insurance which protects you in case they hit you. It has two sub-categories:

  1. Bodily Injury
  2. Property Damage

Both sub categories cover only your own personal injury and damage to your own car.

You are not required to buy this insurance if you are fine with taking the loss by yourself as the probability of getting hit is too low.

#4 Damage to your Auto

US car insurance companies call it collision loss when you hit someone else’s auto and they have to pay for both your and other person’s car damage. This is one of the most expensive part of car insurance.

The other part of coverage is non-collision loss which covers flood, theft, tree and other such damages caused while vehicle was not moving.

Collision insurance is required if you have bought your car with bank or credit union finance or have leased it with car company.

I suggest to not buy collision if your car’s current worth is less than USD 15k. You can cover the damages to your own car if you hit someone. If the other person hits you, their liability insurance will pay for your car’s losses.

#5 Towing and Labor

Car towing and labor will not add much to your yearly car insurance premium. I still suggest to leave it out as most of the new vehicle purchases are covered for free roadside assistance by car manufacturers themselves.

Example, Honda and Toyota have free roadside assistance programs.

Many people also buy the AAA third party roadside service than buying it from your car insurance provider.


#6 Rental Car Insurance

You get a rental car if you hit someone and your car needs to get repaired in garage. Your insurance company will pay for your car rental expenses. Note that only a certain amount per day up-to a maximum limit is covered.

My suggestion is to use Uber / Lyft/ Waze rides these days if required and not buy rental car coverage.
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.

Car insurance Premium rates high for H1B?

Most H1B or L1 visa workers get car insurance rate quote of about $400 per month when the car’s monthly EMI may just be less than $300 per month.

The car insurance company considers your no driving history in USA to be equivalent to a teenager in USA who is a new driver with high risk of getting in to a road accident.

I strongly advises to get driving license as soon as you enter USA to start building driving history even though you do not buy car immediately.

International Driving History

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.

The general rule followed by companies like GEICO, Amica, Liberty Mutual, progressive etc is to check your LAST 6 years of car driving history.

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

In USA, any minor incident like slamming your car door into other car parked next to yours or major one like you hit other car while moving, 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.

Accident information is added to your driving record and every car insurance company 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.


You own a new Honda CRV (bought for $24k).

  1. 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.
  2. 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!
  3. 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

A DUI ticket given for driving under influence of drugs of alcohol beyond approved limits (varies by state law) is considered a very serious offence.

Your H1B or L1 visa can be denied on your next extension by immigration officer or at US embassy interview with a DUI offence.

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.

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Written by Anil Gupta
  By Anil Gupta           

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