Moving to the United States? Here’s What Insurance is Required

A recent survey conducted by Trusted Choice, a brand representing the members of the Independent Insurance Agents & Brokers of America, reveals that nearly 70% of insurance consumers in the U.S. research their policies to find a better price, but one-third of them are unaware of the external economic factors that affect rates. In Brazil, behavior is similar: a Bain & Company survey found that consumers are willing to forgo some coverage to pay less for life, auto, and home insurance.

The survey revealed that:

- 46.6% of Americans have considered or taken a higher deductible to save money on insurance;
- 22% have thought about going without insurance just to save money;
- 83% would switch insurance providers for lower premiums, while
- 59.5% would switch for better coverage.
- 56.3% purchase insurance through an agent, and
- 36.3% buy online through insurance company websites.

What About Brazilians Living in the U.S.?

The United States hosts the largest Brazilian community outside Brazil, with 1.9 million citizens, according to data from the Ministry of Foreign Affairs released in August 2023. The top three cities with the largest Brazilian populations are New York (500,000), Boston (390,000), and Miami (295,000), but there are Brazilians in many other states and cities across the country.

Ana Carolina Neves Houk, a 39-year-old financial analyst who has lived in Charlotte, North Carolina for nine years, notes that the biggest difference she feels between insurance needs in the two countries is health insurance, which is much more expensive in the U.S. "Here in the United States, it's really expensive, especially if you're paying out-of-pocket. If you're not tied to a company, unfortunately, health costs are absurd," she says. It’s worth remembering that the U.S. does not have a public health system like Brazil’s SUS (Unified Health System).

On the other hand, Ana Carolina talks about the usefulness of home insurance, which she acquired with her mortgage. "Last summer, we had a severe hailstorm that damaged my roof. We called the insurance company, and now they are paying for a new roof. And the cost is much cheaper than what it would be in Brazil," she explains.

She mentions that she will likely pay more for the renewal of her insurance due to the claim (an event covered by the insurance contract) that occurred not only at her home but also with her neighbors. To manage price increases, Ana says she always resorts to "getting quotes from at least three companies." She also points out that in regions with a high risk of flooding, home insurance is even more expensive. "That's not our case; generally, it's along the coast. These insurances are quite costly, and this is something homebuyers need to be careful about. With global warming and increased flooding, in some places, the cost of insurance is almost as high as the mortgage payment," she notes.

Which Insurance Is Essential?

According to Daniel Toledo, an attorney specializing in International Law, acquiring home and auto insurance is almost mandatory for those living in the U.S. This is because these insurances are required by companies that sell these goods to consumers through financing.

"Nobody buys a car outright here; it's very rare. Only those without documents buy a car outright because interest rates are very low, so it’s worth financing. And lenders require minimum insurance," explains Toledo. For auto insurance, the attorney states that the minimum coverages typically required are:

- $250,000 for third-party liability if the car owner causes an accident;
- $150,000 for property damage; and
- $300,000 for personal injury if the owner has an accident and needs to go to the hospital.

In Texas, where the attorney resides, driving without insurance can be very expensive. The car can be impounded, and the owner must cover the costs of the fine, towing, and impound lot. "If you don't have car insurance, you will pay a fine of around $500, towing fees of $300, plus the fine to retrieve the car from the impound lot. You'll spend at least $1,000 for not having insurance that costs $100 a month," he estimates.

According to Toledo, "rules" for insurance vary slightly from state to state. "In California, for example, if a resident cannot afford health insurance, the government provides it. In Florida, if you want to buy a motorcycle and it's paid off, you are not required to have insurance," he explains.

Can You Lower Costs?

Daniela Paschoal, a professor at FIA Business School, believes that it is possible to "lower" the cost of insurance in the U.S. The first step is to understand the actual coverage needs. Professional assistance to map these needs can be useful. "It’s important to have an insurance broker who will explain and understand the person’s life, assets, dependents, and protection needs, to avoid paying too much for unnecessary coverage, but also to ensure adequate coverage," she points out.

Another approach is to focus on risk mitigation or adopting preventive measures. "Actions such as avoiding traffic violations can help lower auto insurance premiums," adds Daniela.

According to the professor, it is important to include all anticipated insurance expenses in the family budget to avoid financial strain and ensure that assets are protected.

For the experts consulted, Brazilians moving to the U.S. need to understand that the American culture around insurance is different from Brazil’s. Therefore, adapting to the practices of the new country is essential, even though it may not always be easy.

Source: InfoMoney

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