10 Common Car Insurance Mistakes

By KBB Editors 01/20/2021 1:28pm

car insurance mistakes to avoid

Find out how to avoid common car insurance mistakes when shopping around.

Obviously, not having any coverage is the biggest car insurance mistake you can make. Also, buying the first insurance policy you come across is not the best decision either. 

Because buying a car is considered a big-ticket purchase, it’s not wise to leave such a large investment unprotected. In addition, car insurance is mandatory in all states, except New Hampshire and Virginia, and you are risking large fines and in some places, jail time, if you don’t own auto insurance.

So you don’t make the same mistakes, check out these blunders people make when purchasing car insurance.

Common Vehicle Insurance Mistakes to Avoid

Check out these mistakes people make when buying car insurance coverage and learn how avoid these pitfalls.

1. Not Knowing the Insurance Coverage You Need

Every state has its minimum coverage requirements, but you shouldn’t base your decision on that solely. Each person has unique protection needs depending on many other factors, including:

  • Vehicle type and model
  • Price of the vehicle
  • Experience behind the wheel
  • How much you drive
  • Driving and weather conditions of your living and commuting area

Of course, everybody would like to have full coverage. Nonetheless, it’s usually quite expensive. So, your best bet is to look for the right balance between cost and coverage. If you are unsure of the coverage type you need – whether that’s comprehensive, collision, personal injury protection, or something else – you can always consult with an insurance agent or check out our guide on purchasing car insurance.

2. Not Comparing Insurance Companies

People usually compare the prices of retail goods every time they shop. You should apply the same principle when shopping for car insurance to increase your chances of striking a good deal.

So, always try to get at least multiple quotes from different companies when shopping for car insurance. For example, State Farm and others typically provide lower insurance rates for good drivers. However, if your driving record includes accidents or speeding, you may need to shop around to determine the best and cheapest option for you.

3. Not Telling the Truth on Car Insurance Application

Lying is probably the worst thing you can do when filling out your car insurance application or claim. Insurance companies will access driving records and other personal data and can easily spot inconsistencies. Based on that, they can refuse to insure you and reject your application. But that is not the biggest danger.

If an accident happens and they discover you lied, they can refuse to pay out your claim and cancel your policy. Also, many companies won’t be willing to insure you if they see a cancellation on your record. So be completely open about your driving habits and the condition and value of your car.

4. Forgetting to Update Your Insurance Policy

While forgetting is not the same as lying, it’s one of the most common car insurance mistakes and some insurance companies treat both the same way. For example, if you don’t add your teenage driver to your existing policy but you let him or her drive your car, you can experience some pretty severe consequences.

Updating your policy is not always bad though. If you marry or move into a safer neighborhood, your insurance rates are likely to go down.

5. Choosing the Wrong Deductible Amount

The deductible amount is an important part of your car insurance policy. Generally, a lower deductible means a higher insurance price but less out of pocket expenses if an accident occurs. A higher deductible, on the other hand, saves money on your policy but makes you pay more if you get into an accident.

Still, it’s normal to be hesitant about deductibles. Find out more about common types of car insurance coverage and how to choose a deductible that’s right for you.

6. Not Researching Car Insurance Online

One of the best ways to shop for car insurance is through online comparison sites. Nowadays, everybody is online and companies have to adapt. You can even compare car loans if you’d like to.

There are many online platforms that could get you multiple insurance quotes after you fill out a single application that takes not much time if you have all the necessary documentation on hand. Keep in mind that some of these sites provide estimates while others provide real quotes. In both cases, however, you can get a pretty good overview of the current rates available to you.

Also, most insurance companies provide quotes on their own websites so you can do that instead of visiting an office or calling them.

7. Buying Just the Minimum Insurance Coverage

It may be tempting to just get the minimum coverage insurance. But that is not always very smart. That’s why it makes the list of common car insurance mistakes. In almost 100 percent of cases, minimum coverage is simply far from enough.

What’s usually required is liability coverage, which in fact doesn’t protect you but mainly the other person you collide with. Moreover, liability limits are typically low, which leaves room for the other person to sue you for much more than what’s covered by your policy.

Also, if you drive an expensive vehicle, it’s good to consider getting both collision and comprehensive coverage. Otherwise, you risk big financial loss in case of an accident or if your car gets stolen.

8. Buying Excessive Coverage

It’s possible to buy too much coverage just as you can buy too little. For example, if you have an old vehicle, it doesn’t make sense to buy an expensive policy or full coverage. Aggressive advertising shouldn’t make you change your mind.

What’s more, you generally shouldn’t pay more than one-tenth of the value of your car towards insurance.

And if you can’t find a policy at a good rate, maybe it’s time to consider looking for a new vehicle.

9. Not Asking Questions

Whether you are getting auto insurance through an agent or with a specific company, always ask questions if something is not clear. Agents and companies will often use fancy words and industry jargon to distract you and seal the deal. But when you don’t understand a term or what they are trying to say, make them stop and explain.

Although you think you may appear rude or silly, that’s not the case. After all, it’s their job to help customers make informed decisions and educate them. There’s nothing to be afraid of.

10. Not Looking for Car Insurance Discounts

Last but not least, you can always make pretty good savings if you keep your eyes open for vehicle insurance discounts. It’s one of the common car insurance mistakes because these can be updated annually and sometimes people don’t ask.

There are some popular ways to save like bundling your home and car insurance with the same company or insuring multiple cars with the same provider. There are many other available discounts.

You can always ask the insurance company what types of discounts they offer. For example, a good student discount or safety equipment discounts may be available. Having an affinity membership at AAA or a similar organization can also save you money.