Common Car Insurance Mistakes Might Cost You

Cutting corners to save on car insurance can cost you more than you saved. In order to find the right policy for you and your wallet, it requires being informed. Read on to avoid making these common mistakes that can cost you.

The cheapest option isn’t always the best option.

Good insurance is worth every single penny. What defines “good insurance?” The answer is different for everybody. But one way to help you find the right answer is to learn from common mistakes made from others, to save you the time and money potentially lost from committing the same mistakes.

Mistake #1: Not Understanding Your Coverage

This common mistake happens when people don’t do enough research or ask enough questions about their coverage. As a result, some people end up paying for more coverage than they need. Or worse, missing out on the coverage that they do need.

Solution: Don’t be afraid to ask for help. Ask questions and seek answers. Reach out to company representatives about your concerns. They can help you decide on what coverage you’ll actually need.

Mistake #2: Not Considering Other Options

Shopping around for the right policy can be stressful and emotionally draining. As a result, some people settle for the first few options they find and don’t take the extra time to explore other options. To save time, they lose out on better offers, and end up paying more for that time not spent on seeking them out,

Solution: Don’t assume all car insurance companies are the same. Check out the rates of at least four companies before you decide. Companies may have similarities in their policies, but they’re unlikely to be the same. Consider and compare as many rates and policies as you can to find the right coverage for you.

Mistake #3: Assuming You’re Covered

This is similar to Mistake#1: Not Understanding Your Coverage. Don’t assume you’re covered for all situations and scenarios. “Full Coverage” doesn’t mean you’re protected and covered from all possibilities that can happen with your vehicle.

Solution: Discuss with your insurance company about the coverage you need. In order to further help you decide on the right amount of coverage, they can lay out situations and scenarios you could encounter but may have overlooked. They can identify any gaps in your coverage to help you understand what you might be missing and could potentially need someday. Before you purchase, make sure your coverage is sufficient and right for you.

Mistake #4: Buying The Minimum Amount of Coverage Required

One major mistake that can lead to more harm than good is trying to save money on purchases meant to protect you. Some people opt for minimum liability coverage to keep their car insurance premiums low, losing out on the coverage they’ll actually need.
Solution: Talk with your agent about realistic amounts of coverage you’ll need in likely and worst-case scenarios. It’s better to be prepared than sorry when it comes to situations that minimum liability coverage won’t be able to cover.

Mistake #5: Not Considering Additional Coverage

Not considering policy add-ons is another aspect of the previous mistakes: not doing your research, not considering all of your options, assuming you’re covered, and skipping on coverage to save on cost.

Solution: Take a second look at your coverage and examine what your coverage entails. Does your policy cover all possibilities for when you encounter an accident? What about situations likely to happen because of and after the accident? If you see any gaps, missing information, or vague details, ask a company representative for help. A policy add-on might be the answer you need.

Mistake #6: Focusing Only on The Cost

Some people focus on the cost of their car insurance policy and make assumptions. They assume the best price is the best coverage, or that a higher price must mean they’re completely covered and protected for all possible scenarios. But the price doesn’t tell you everything about what your coverage includes.

Solution: The price is only one aspect of the various elements you should consider when choosing a car insurance policy. Don’t focus only on the price. Make sure to consider the types of coverage, possible add-ons and extras, benefit levels, limits, as well as the companies’ reputation and claims history.

Mistake #7: Choosing Deductibles That Are Too Low

Some people choose a low deductible to avoid paying too much out of pocket after an accident. But as a result, you end up with higher monthly premiums. A low deductible may seem like the better option to save some cash, but over time, you could have saved more by paying a higher deductible.

Solution: Compare different policies with both low and high deductibles. Take a moment and really consider what would be the best for you, in consideration of your driver’s history and what kind of deductible you can afford. Consider how much extra you pay for paying a low deductible and how long does it take for the extra premiums to match the difference in deductibles. Would a higher deductible be better for you?

Increasing your deductible from $200 to $1000 could save you up to 40% on your premiums and potentially qualify for a claims-free discount, according to Kiplinger. It will also increase your out of pocket expenses if you have a claim, which should be manageable if you shift most of all of those savings into some sort of emergency fund.

Mistake #8: Paying Your Premium

Paying your premiums monthly in smaller amounts may seem less burdensome than paying your premium all at once or twice a year. It’s easier to budget for other expenses by not feeling as much as a loss. However, paying annually or bi-annually may result in more savings than paying month-to-month.

Solution: If you can afford to, pay your premium annually or every 6 months. Some companies charge interest or service fees for paying monthly. Some companies also lower your premium rate as much as 10 percent if you pay in full. Make sure you take a thorough look at your plan, calculate for potential savings or extra expenses, then make the best option according to what you can afford.

Mistake #9: Ignoring Discounts

Some people just don’t know a discount exists. Make sure to do your research to see if there are any discounts you possibly qualify for. When in doubt, talk to an agent to explore what discounts you may be unaware of and of any recent events that could impact what you qualify for. This includes major life events like getting married or a career change, or vehicle changes like adding a new safety feature to your car.

Solution: Do your research. Ask your insurance about what discounts are available and what you qualify for, or how to qualify for some. When shopping around for other forms of insurance, consider purchasing it from your car insurance company for a bundle discount.

Mistake #10: Lying to Your Insurance

Sometimes we forget details that we don’t realize is important. For others, they lie on their application out of fear over what certain information could cost them. However, when processing your application, any omitted or falsified information is brought to light.

Solution: Tell the truth. Don’t lie or purposely omit information. When the insurer prepares your policy, they’ll look into a CLUE report and your past driving history, revealing your past ticket and accident history. You may be able to get a good quote by leaving out relevant information, but any past DUIs, accidents, or traffic violations will be discovered in the end.

Mistake #11: Not Considering Customer Service

For many, a company’s customer service may be the least of their worries. However, it plays a major part in your satisfaction, comfort, and accessibility in understanding your coverage and what you’re paying. Dissatisfaction or bad customer service can make it hard for somebody to be fully equipped with information about what their insurance company has to offer, which is a major obstacle when trying to avoid making mistakes and saving money where you can.

Solution: Take careful consideration of their customer service reputations by checking out what people have to say. Check how they compare to other companies’ customer service. The National Association of Insurance Commissioner’s Consumer Information Source (https://eapps.naic.org/cis/).

State insurance commissioner websites also usually have detailed complaint reports, where you can compare complaint rates (insurance.ca.gov)

Lastly, there are also independent sources that have customer service surveys like J.D. Power and Consumer Reports.