7 Car Insurance Mistakes You Should Avoid

You can save a lot of money if you know how choose the right car insurance, and avoid some expensive mistakes, which are very common among younger drivers.
7 Car Insurance Mistakes You Should Avoid

Buying car insurance is never a fun experience. And just having to pay for it can be a rough experience. At least, until you actually need it. That’s why it’s important to look for the best balance you can find on your car insurance. What’s the most insurance you can get while paying the least amount possible?

Well, the process is actually going to involve a bit of research on your part. Part of it is choosing the right car and then you need to look at things like your options and your budget for paying that insurance.

You should know that just about every state in the country requires you to have insurance, so you want to make sure you’re getting the right type before you start driving. We’ll take a look at some of the most important things you should know.

1. Not Understand The Policy

If you don’t know what your insurance policy actually says then you’re definitely making a big mistake. You want to make sure that you have a good understanding of the policy so that when you do have to file a claim you know what’s going to be covered and what’s not. That means looking at everything they give you.

Read the entire policy, read the fine print about exclusions and know how quick and easy it’s going to be to make a claim. Talk with your agent to make sure you understand everything that you’re reading and that you’re reading it properly.

Just because you think it means one thing doesn’t mean that’s actually what you’re getting. Never assume anything when it comes to your insurance policy. Make sure that you verify it.

2. Buying a Too Expensive Car

Maybe you decided that you could afford that beautiful, expensive vehicle, but did you actually look at the cost to insure it after you bought it? Trim levels, engine options and more can all cost more when it comes to your insurance, so it’s important that you take a closer look at the costs after the purchase.

Make sure you talk with your insurance agent and discuss some of the different types of vehicles that you’re looking at.  They can give you an idea of what insurance will cost with those different vehicles so you can be prepared and make the right decision.

The key is that you’re going to have different costs to repair vehicles and some are more prone to needing repairs than others. You want to know that before you get into anything.

Next, watch out for high-risk drivers. If you’re considered high risk or someone else in your household is you may not even be able to get coverage for certain vehicles. A high-risk driver plus a high-risk car is definitely no for some insurance companies.

3. Not Knowing What You Need

Make sure you know what the laws are in your state to make sure you’re matching the minimum of what your state requires, but then take a look at what you actually need in order for you and your family to be safe in case something happens to your vehicle. It’s all about what you can afford when problems arise.

If you only cover your vehicle with the minimum you’re going to be able to drive it, but if you have an accident you’re probably not going to be doing so well financially. If you get only a small amount of insurance you’re going to be responsible for the cost over and above that amount. So, if your insurance only covers $12,000 but you cause $30,000 worth of damage, guess who’s responsible for that extra $18,000?

On the opposite side, you don’t want to spend more money than you need to when you’re buying insurance. Don’t pay a fortune when you could easily replace the vehicle for far less. You want to have coverage that makes sense in case there’s a problem, but not something that’s going to cost you more than the vehicle is actually worth.

Talking with your insurance company and your agent is a good way to get an idea of what you actually need. Talk to them about the vehicle in question and what kind of coverage is recommended. Don’t be afraid to talk with different insurance companies as well and try to avoid paying for policy add-ons that you don’t actually need. You want to save money, after all.

4. Taking The First Offer

When you go out to buy insurance you need to take a look at more than just one insurance company. If you only pay attention to one company you’re going to set yourself up for a more expensive service. Instead, you want to take a look at several different companies and get several free quotes.

Make sure that you’re shopping long before you actually need to purchase the policy.

This will keep you from making a quick decision because you are desperate. After all, is you are facing your dream car and the only thing standing between you and it is an insurance policy you could easily be tempted to sign up with the first service you find. You definitely don’t want that to happen.

Now, keep in mind that comparing insurance isn’t always as easy as you would think. Most companies don’t have an exact match to what the other companies are offering. That means you’ll need to look at different offers, deductibles, levels of coverage and more to make sure you’re comparing as closely as you can and that you’re going to get the right level of coverage for a good price.

You should also have coverage for:

  • Bodily injury liability
  • Property damage liability
  • Uninsured/underinsured motorist

Other types to consider include comprehensive and collision. Comprehensive will cover theft, vandalism or fires or other natural disasters. On the other hand collision covers the cost of repairs if there’s any collision with someone or something.

You’ll also want to know what the requirements are for each of these policies and amounts based on your state.

Finally, don’t purchase insurance based just on how much it costs. You could end up with bigger problems down the road.

If you are responsible for an accident and find out that your insurance doesn’t cover as much as you need you’re the one responsible for it. An inexpensive policy may not help you out in these cases, so you want to be careful about what you’re getting into.

5. Falsifying Your Paperwork

When you don’t have the best record it generally feels better if you can fluff things up a bit, right? Well, it’s definitely not going to be good for you in the long run. The insurance underwriters who have to approve your policy are definitely going to find out about that speeding ticket, and the fact that you’re not actually a student.

The reason is that they actually have the legal authority to look at anything and everything that could affect your policy. That includes things like your job, your memberships, your marital status, driving record, credit score and address (and a whole lot more). So, if you lie on something you are definitely going to get caught and that’s going to increase your insurance by a lot.

6. Skipping Discounts

On the opposite side of things, it’s a bad idea not to take advantage of the discounts you do qualify for. Make sure that you look at things like good driving discounts or loyalty discounts. All of these things are going to save you a whole lot of money because the company knows you’re less likely to file a claim.

You can even get discounts for having certain safety features on your vehicle (like a car alarm or automatic locks). You want to save money wherever you can, so make sure you’re looking for any possible discounts.

7. Not Having a Good Deductible

There are generally several different options when it comes to your deductible. If you have a lower deductible you’re going to pay more for your insurance every month. A higher deductible means a lower premium each month. That makes it a great way to save some money if you’re able to come up with a higher amount in case of an emergency.

In general, you can get a deductible that goes all the way up to $2,000 a month, but if you currently have a $500 deductible just going up to $1,000 is going to make a really big difference. Just make sure that you can come up with $1,000 if there’s ever an emergency with your vehicle.

On the other hand, look at it this way. If you are paying for a lower deductible you’re going to have a slightly higher premium each month. Generally, this will be around $20 per month, which isn’t going to be a whole lot. If you have that $1,000 deductible, however, you’ll need to be able to come up with that money all at one time.

If you do want to save on your monthly premium, however, you can definitely do it by increasing your deductible.

Bottom Line

What you should know is that there are some facts when it comes to car insurance that you can’t get around. Younger drivers are going to pay more than older drivers, for example. High-risk drivers will pay more than those with a good driving record.

Those who have a very simple policy will pay the least, but you’ll have more of your own responsibility if something happens. And if you don’t have insurance you’re going to have a whole lot of problems if you ever get into an accident or have any kind of damage to your vehicle. Even if your state doesn’t have a law against this, you’re going to be on the hook for all the costs. Make sure you’re paying attention to all of these things when you purchase your insurance.