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Top Ten Mistakes When Buying Auto Insurance

Buying car insurance that is right for you, your vehicle and your budget can be a daunting experience. There’s so much to learn and the terminology can be a little difficult to understand.

To get the right coverage that’s going to provide you with the peace of mind you need without breaking the bank, you’ve got to carefully consider all of the many options that are sure to be placed in front of you. It is important to educate yourself in advance so you can avoid ending up with coverage that you’ll regret when it’s too late.

Top ten mistakes people make when buying car insurance.

Buying minimum coverage.

Some car buyers are so focused on paying as little as possible on insurance that they buy the minimum amount of coverage required. However, while this may meet legal requirements and save you money on premiums, it could come back to haunt you, especially if you get into an accident with an uninsured or underinsured driver.

No matter how good a driver you are, you’re not immune from the mistakes other drivers make while driving. If you don’t protect yourself with adequate insurance, the mistake of one reckless motorist can end up having devastating consequences on your entire life. This is why it is absolutely essential that you are sufficiently protected every time you are on the road.

Standard liability policies cost only a little more but cover a much larger dollar amount per accident, giving you much better protection against lawsuits. Rather than buying inadequate coverage, shop around and explore all of the discounts available to you to ensure that you’re adequately covered.

Buying directly from an insurance company instead of an independent broker.

The biggest reason why people buy the wrong coverage is because they buy from directly from an insurance company rather than an independent broker. The problem with buying insurance directly from an insurance company is that they are not legally bound to evaluate your insurance needs or sell you the correct coverage for your circumstances. You need to already know exactly what you want before approaching them. Essentially, you are buying insurance, not paying for advice.

On the other hand, when you buy auto insurance through an independent insurance broker who represents several different insurance companies, you’ll be dealing with a professional who will thoroughly assess your needs to make sure you get the right coverage for your circumstances. After you have answered a few simple questions, such as age, car type, security features installed on car and average mileage driven per year, they’ll be able to search around for you to find the best deal.

Not considering a company’s claims history.

All insurance companies are not created equal. Before you decide where to buy your car insurance, it is important to check out the reputation of different companies online. Some car buyers get so focused on finding the cheapest deals that they don’t pay enough attention to the coverage benefits and insurer’s reputation.

When you’re comparing and contrasting a bunch of different policies, it is important to how an insurer will react if you file one or more claims. If the insurer you go with offers the cheapest deal but has a history of evading claims, your premiums essentially get wasted. Before you sign your life away, look up the insurer’s customer-service rating through the National Association of Insurance Commissioners’ Consumer Information Source, and avoid companies with a higher-than-average complaint ratio.

Lying on your insurance application.

It’s tempting to distort the truth in order to cut the cost of your premium, but lies can come back to haunt you. Your insurer will likely find out when they dig into your background in order to finalize your premium payments.

If your car insurance company finds out you’ve omitted or given false information on your quote, your actual premiums will dramatically exceed your quote. They can also cancel your policy and refuse to pay any claims. The most common lies include providing an incorrect home address, not disclosing convictions and misrepresenting their annual mileage estimates.

Not updating your policy after a life change.

Since you first purchased your auto insurance policy, how much has your life changed? For example, when you add a teen driver, get married or divorced, have a child, or buy a new car, you should let your car insurance company know.

If you have recently got married, one thing you can do to lower the monthly payments on your car insurance is by adding your spouse to the insurance policy. Most auto insurance companies give discounts when they know their customer is married because they associate marriage with stability.

Choosing the wrong deductible.

Some car buyers opt for no deductible or a small one in order to avoid handing out too much cash if they get involved in a car accident. The problem with paying little or no deductible is that it’ll likely cause you to pay more for premiums than you could recover in claims or than you would if you raised your deductible a bit.

Signing up to a low insurance deductible also encourages you to make small claims which could cost you a claims-free discount or prompt your insurer to drop you. If you have a history of safe driving, increasing your car deductible could save you a significant amount on your car insurance premiums.

Not asking for discounts.

Failing to ask for all possible discounts is another common mistake for car insurance buyers. Most insurance companies offer discounts, but you’ll have to ask for them. There are probably a few discounts available that you didn’t know about when you signed up for your first insurance policy.

For example, you can take a “safe driver’s course” that’ll increase your driving skills and lower your insurance premium. Ask for a list of discounts your provider offers, and thoroughly review it in search of discounts for which you think you qualify for.

Not paying in full.

You might choose to pay for your insurance on a monthly basis because it’s easier to budget for smaller bills that have to be paid regularly rather than bigger ones that have to be paid less often. It is important to realize that your premiums will be much more expensive if you choose to pay in monthly instalments.

If you can handle it, pay your premium “in full”, which probably means paying every six months or once per year. Some insurance providers charge interest or other service fees if you make monthly payments, while others will lower your premium rate by as much as 10 percent if you pay in full.

Not shopping around.

Insurance premiums vary dramatically because every car insurance company uses its own set of parameters to analyze risk. Some insures are more interested in your driving history, while others may focus solely on your credit score. This means that two insurance companies can offer the exact same coverage at very different prices. If you’re shopping for car insurance, check out the rates of at least three or four companies before you make a decision.

Even if you already have car insurance, the experts suggest that you should still shop around rather than automatically renewing your existing one, which is what many consumers do. While the car insurance policy you took out last year was the best deal at the time, it might not be the best deal this year. You should never renew your car insurance without speaking to a car insurance broker first.

Not understanding your needs.

Buying without understanding the type of insurance coverage you’re signing up to can be a dangerous decision that could have serious financial consequences. Take the time to read the coverage you’re getting, and don’t be afraid to ask questions early on in your decision-making process.

For example, you should know if the coverage you’re getting will pay for a rental if your own car is damaged or totaled in an accident. Take notes and refer to them when the time comes to purchase so that you don’t get a shock if the unexpected happens.

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