Decisions about car insurance are just as important as choosing the car itself. But if you are like the average American, you probably hate shopping for car insurance. You probably do not like going through all the offers and doing a thorough study before making the transaction. This results in many car owners making devastating financial mistakes.
But making the right purchase decision for car insurance is a vital step. This does not just concern your financial health. Shopping for the right auto insurance also determines the type of car you want to drive. On top of everything else, driving without car insurance is an offense in most states in the US.
In this post, we identify the seven most common car insurance shopping mistakes.
7 Most Common Car Insurance Shopping Mistakes
#1 Not shopping around at all.
According to a survey conducted on car insurance shopping behavior, up to 36% of car insurance buyers do not shop around at all. There are two serious consequences due to this: One, you miss out on fantastic deals from some of the top insurance agencies. Two, you might have to pay a higher amount for a car. In some states, unless you have valid documents for car insurance, you cannot complete the transactions on a car.
Some insurance agents can even get free quotes from several companies if you ask around. This can be a fantastic way to get the best deal on your car insurance. In addition, you should also consider shopping for a new auto insurer after every few years to keep abreast with the best deals on the market.
#2 Getting the cheapest insurance you come across.
Getting the cheapest auto insurance can be even worse than not shopping around for options. Car insurance that comes cheap typically does not have enough protection in case of accidents.
The best auto insurance typically has comprehensive and collision insurance. This means that you get protection from accidents, vandalism, natural disasters, and collision with another vehicle. Naturally, these insurance policies carry a higher price, but they give you all the protection that you and your car needs. Cheap auto insurance policies very rarely include the types of protection listed above.
#3 Providing false information on the application.
Surprisingly, providing false information is never a good practice and especially when it comes to securing insurance. Correct information related to your car’s overall condition, its value, accident history, and driving history is very important.
In case your car insurer discovers discrepancies in your application, they can reject your application. This means that you get no coverage in case of an accident. In addition, a cancelation record on your portfolio reduces your chances of getting car insurance in the future.
#4 Not considering other insurance companies other than your current insurer.
The world of auto insurance providers is a very competitive one. Gone are the days when a handful of insurance companies called all the shots. However, there are hundreds of car insurance companies available now – both offline and online.
To know whether your car insurance company is offering you a competitive price or not, get quotes from multiple companies and compare notes. If you find that your current insurer is not offering a good deal, don’t hesitate to bring it to their notice. Most insurers will be willing to adjust their rates.
If they don’t, you can simply switch to a new provider and save a lot of money as well. Sticking to a company year after year can be great in terms of loyalty benefits. However, for auto insurance, this may not be the best idea or deal for your pocket.
#5 Purchasing too little or too much coverage.
Most state laws in the US require car owners to have minimum coverage on their insurance policies. However, as the name suggests, this is the minimum requirement and is typically not enough to cover motor accidents. The type of insurance you decide on will depend on many factors, including the type of car that you drive.
However, getting car insurance that covers the bare minimum can leave you financially vulnerable after a collision. The situation can be even more grave if you drive an expensive car or your car is a new model that you bought recently.
Along the same lines, there can also be too much coverage in your car insurance plan. A good example is when the insurer offers a separate package for towing and roadside assistance packages. This can be unnecessary since most of the new car models from top companies have roadside assistance coverage. So unless you drive a luxury car or similar, you do not need an insurance policy with a premium liability limit.
#6 Zooming on a policy with low deductibles.
Did you just come across a car insurance policy with low deductibles? Deductible in your auto insurance plan is the amount that car owners bring out of their pocket before the insurance policies take over. This type of auto insurance plan can be very attractive, especially if you were involved in a car accident.
But overtime paying the premium on any type of insurance with low deductibles can drain your finances very significantly. In the long run, buying a policy with high deductibles can save a lot of money.
#7 Purchasing the wrong policy.
Yes, there is such a thing as buying the wrong policy for your car. Most car owners encounter this problem when they do not understand their needs and the amount of coverage they want on their car. In addition, some people don’t even bother to go over the policies and simply ask their agent to transact the deal.
But every car and its owner is different. So a wrong policy can leave you under or over insured. You pay extra when you could be saving some serious dollars.
Irrespective of how careful a driver you are, motor accidents are bound to occur. Additionally, you have no control over such incidents as theft or a natural disaster. In such a situation, having the best car insurance plan can be a lifesaver.
So take some time to research and get only the best car insurance plan that will cater to your needs.