Auto insurance is one of those integral expenses for all vehicle owners. It saves money in a financial backlash in cases of accidents, theft, and other unpredicted eventualities. However, purchasing auto insurance has always been so tricky, with so many making massive mistakes that result in poor coverage, more premiums, or even hardship in filing claims. The following common mistakes are avoidable when buying auto insurance.
- Too Price-Oriented
Tenants of auto insurance most popularly err in this area: buying on price alone. It’s not illogical to want to save money, but the most affordable isn’t always the best. A low-cost policy may carry higher deductibles, lower amounts of coverage, or exclusions that will leave you underinsured in the event of a claim.
Instead of staring wide-eyed at the premium, look at the overall value of the policy. Look at what’s included in terms of coverage offered, the limits on that coverage, and the reputation of the insurance company. A slightly higher premium might precisely do that—offer a significant quality of protection—and save you money over the long term, as it will cover more expenses if you need to make a claim.
- Not Understanding Coverage Options
Auto insurance comes with multiple alternatives of coverage offers, and knowing what it covers is important. Many drivers sometimes make the mistake of thinking all policies are the same or being estoppel, and thinking they know the terms without really getting the details. Here are some fundamental types of coverage that you will be exposed to:
Liability coverage: covers damages caused to other motorists in an accident, such as bodily injuries and property damage. It is a requirement in most state laws of the country, although it comes along with a minimum supplied limit that can never be enough in the incidence of serious accidents.
Collision coverage: pays for any form of damage to the vehicle regardless of who was at fault in the accident. More so, it is particularly important if you have a new or expensive car.
Comprehensive Coverage: This covers such things as your car being stolen or damaged by something other than a collision, such as theft, fire, vandalism, flying debris, or hitting an animal. A necessity here is what’s termed “acts of God,” like tornadoes, floods, or earthquakes. It is best if your living space is in an area where such instances are relatively common.
Uninsured/Underinsured Motorist Coverage: This will ensure you are well covered in case another driver hits you and they are either uninsured or underinsured, and the cost of your damage exceeds their liability. Given that a large portion of drivers are either well under-protected or have no insurance at.
Personal Injury Protection (PIP) or Medical Payments: This applies to medical expenses that result for you and occupants after an accident, regardless of whose fault it turns out to be. It could pay for lost wages and any other miscellaneous expenses as well.
By understanding the above options correctly while choosing the right ones, one could avoid leaving their risks to be left uncovered.
- Not Shopping Around
One of the common mistakes is sticking with the same insurance company year after year without shopping around. In fact, insurance rates can vary greatly, and a good deal last year might not be one this year. Besides, personal conditions, such as credit score or the driving record, could have changed, and that might affect those premiums.
The right thing that one could do before renewing the policy or buying a brand new one is by drawing quotes among several insurance companies. Today, with the help of various online tools for comparison and independent insurance agents, the job of finding the best rates that suit your needs has become easy. Even if you’re currently fine with your current insurer, shopping would give you the leverage that’s needed for negotiating a better deal.
- Selecting Inadequate Liability Limits
Many drivers choose to purchase minimum liability coverage in order to save on premium costs. However, it frequently proves insufficient to cover the total expense of collision. If you happen to cause a serious accident and your liability is not sufficient to offset the costs, you may be subject to the difference. It may require you to pay cash out of pocket or even bring about litigation to assist with some of the costs.
Consider higher liability limits than the minimum required. This usually costs little additional premium, and can offer substantially more financial protection to you. Keep in mind that you need to carry enough liability coverage to protect your assets in the event of a lawsuit.
- Ignoring Deductibles
The deductible, finally, is the amount you will need to pay out of pocket before your insurance company kicks in. Most people invest quite a lot of time and effort in picking the best way to lower their premiums by means of a high deductible, without really factoring in whether this would be affordable for them in the event that they needed to make a claim.
Before you settle for a high-deductible policy, assess your financial status. Can you manage to pay for the deductible should disaster occur? If not so, you may prefer to pay a bit more in premiums for a policy with a lower deductible. The trick to ensuring you find a policy that remains cost-effective and at the same time provides adequate coverage is finding the right balance between your deductible and your premium.
- Not Taking Up Discounts
Typically, insurance providers have many available discounts that could save you a lot of money from your premiums. However, most individuals often do not know or just disregard the opportunity by failing to ask about these discounts. Some of the available discounts include the good driver discount.
Multipolicy Discount: Some companies offer a large discount for taking a variety of policies out with them, including your car and another policy such as your home or renters insurance policy.
Good Student Discounts: If you have a good student who is an adolescent or a driver, you will be eligible for a discount.
Low Mileage Discounts: If you drive less than the average number of miles per year, you could qualify for a lower premium.
Safety Devices Discount: Vehicles installed with anti-theft devices and airbags receive a discount in most cases.
Ask your insurance agent about the type of discounts you are supposed to receive, and make sure they have been applied to your policy.
- Failure to Regularly Review Your Policy
Just like other requirements, the insurance needs change over time. In fact, it is one of the common mistakes that people make by not reviewing their auto insurance policy on a regular basis. The need for insurance can be affected by major life events, such as moving, getting married, or even buying a new car.
Review your policy at least annually to be sure it continues to satisfy your needs. Make sure your limits are high enough, your deductible remains reasonable, and there are new friendly discounts you can get in the mix. If you have made any major life changes, be sure to get in touch with your professional agent to discuss how they may impact your coverage.
- Neglecting Good Customer Service
Price and coverage are important, but so is customer service. You definitely want an insurer who is responsive, helpful, and works with you easily in the event you ever need to claim or file a claim because of an accident.
Research the customer service reputation of any insurance company you’re considering. Look for reviews and ratings from other customers, and check how the company handles claims. A company with poor customer service can make a stressful situation even worse, so it’s worth paying a bit more for a company known for taking care of its customers.
- Assuming Comprehensive Coverage Includes Everything
Full coverage is sometimes misunderstood as providing protection for all types of damages to your vehicle. While it does go pretty far in terms of the incidents involved—everything from theft to vandalism to natural disaster—it doesn’t go all the way. For example, it doesn’t pay for damage resulting from a collision. That’s covered by collision insurance. It also does not cover wear and tear on your vehicle.
Know what is covered and what is not under a comprehensive policy. If you want some particular risk coverage, such as roadside assistance or rental car reimbursement, you may have to add some extra endorsements.
- Failure to inform a change
Auto insurance is acquired based on many factors, including location, type of vehicle, driving habits, and others. Not keeping your insurer up to date with new information can cause problems down the line. For example, if you move to a new state or get a new job with a shorter commute, these could lower your premiums.
Always update your insurer in case of any change that affects the policy with respect to your life. This gives you the right coverage and could save you from most of the problems experienced in trying to claim for compensation.
Conclusion
Car insurance is an important undertaking that any single person needs to consider and be cautious about. By doing so, you can sidestep some of the typical mistakes: lowballing price, failure to shop around, and lack of understanding of coverage options that best suit your protection needs. Take the time to review your options, ask questions, and choose a policy which offers the best balance of cost, coverage, and customer service. It’s going to provide you with some peace of mind and financial security, no matter wherever you will be out on the road.