In just about every state it’s mandatory that drivers carry insurance on their vehicles. It means that at some point in your life, you’re going to need to go shopping for a car insurance policy. You likely won’t be surprised to learn that no two insurance plans are created equally. Therefore, it’s possible to make mistakes when purchasing your policy.
In this guide, we’ll talk about common mistakes when buying car insurance and how you can be sure you’re getting the best rates and the best car insurance policy.
Failure to Shop Around for a Car Insurance Policy
If you haven’t shopped around for your auto insurance policy, you’re making one of the most common mistakes. It may be tempting to grab the first policy you see, particularly if it’s with an insurer you already do business with. Don’t make this mistake, be sure to compare rates and quotes for your insurance.
Car insurance isn’t one size fits all. There are many coverage options available to you, and some insurance companies offer “perks” along with the coverage. For instance, an auto insurance policy purchased through a motor club may include roadside assistance as a part of the policy.
Do your research and compare not just your insurance quotes but the coverage you’re getting. You can save a lot of money by just taking the extra time to examine your options.
Under- and Overbuying Car Insurance
Each state has a mandatory minimum coverage amount for car insurance. That means that if you don’t have the bare minimum, you won’t be able to register or legally drive your vehicle. Minimum insurance coverage is, of course, the cheapest coverage, and many drivers simply purchase that minimum. This could be a mistake.
On the flip side, it’s absolutely possible to overbuy your car insurance, as well. Imagine you have an older vehicle that’s valued at just a few thousand dollars. There’s usually no need to purchase collision and comprehensive insurance, as your vehicle would likely be totaled in the event of an accident.
As you shop for your insurance, explain your situation to your insurance agent. They can assist you in building the insurance package that’s right for your vehicle, your budget, and your needs.
Forgetting About Discounts
One of the most common mistakes when buying car insurance is not asking about available discounts. Your insurance agent will potentially mention one or two to you, such as a discount for paperless billing or automatic payments. There are others, however!
You can get a discount on your auto insurance for safe driving, for being married, for belonging to an auto club, or by banking with a particular institution. You can get car insurance discounts for graduating from a university or being affiliated with that school.
Again, you’re going to have to do a little research. Your car insurance company doesn’t necessarily benefit from giving you the best deal. You have to ask around to determine what you’re eligible for.
Failing to Periodically Review Your Insurance
It’s a good idea to shop around for a car insurance policy, even if you think you have the best one. Every six to twelve months, hop online and check out the rates that are available to you. This is especially helpful if you’ve experienced a major life event. For instance:
- If you’ve purchased a new vehicle
- If your teen driver earned her license
- If you’ve gotten married
- If you’ve gotten divorced
- If you’ve gotten a ticket
- If you’ve graduated from university or graduate school
Even if none of these applies to you, it won’t hurt to check out your options. Switching insurers can sometimes save you hundreds of dollars in premium payments.
Buying Too Much Car Insurance
Your insurance premiums will be affected greatly by the type of car you drive. A sports car will generally cost more than an old minivan, and one of the most common mistakes when buying car insurance is simply buying too much car.
Before you sign on the dotted line for your new Mercedes, check out how much it’s going to cost you to insure it. Can you realistically afford the premiums? Consider, too, that many banks will require that you carry comprehensive and collision insurance on a leased vehicle, or one that has not been paid off.
Summary: Mistakes to Avoid With Your Car Insurance Policy
Car insurance is a requirement for drivers, and for that reason, it’s tempting to just take the “first available” policy. Don’t make this common mistake! You can save a lot of money by just doing a little bit of research and re-evaluating your policy from time to time!