Auto Insurance Mistakes
1. Not having proper coverage
The most common mistake drivers make is not knowing their legal requirements and underinsuring themselves because of it. In many states, your required insurance minimums cover only the damage you do to others in an accident – not what you owe on your own car.
People typically think they just need liability, but if you hit someone with a $50,000 car and only have $25,000 worth of bodily injury protection, that’s how much your insurer will pay for that person’s injuries – up to your policy limit – and the rest comes out of pocket for you.
“Also remember that any assets you own could be at risk if sued by someone else because of personal injuries so it may be appropriate to consider purchasing additional coverage.”
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2. Not knowing your insurance policy thoroughly
Many people don’t read their entire policies before they buy them, so it’s easy to be confused by the fine print once you have an accident.
For example, some expensive new cars come with “gap” insurance, which pays the amount the car is worth after an accident minus what you pay under your loan or lease – that way if a repair bill ends up being more than the vehicle’s worth it at least won’t affect your credit score.
It may seem silly since you’d have your car fixed anyway but some customers are unaware of this until after they’ve filed a claim for something like hail damage and had their claim denied because they were not aware of the gap in insurance coverage.
3. Unnecessarily raising your deductibles
Remember, the higher your deductible is, the more you will pay out of pocket for a claim – and it’s an amount you can choose.
If you’re buying new tires and don’t mind paying out of pocket, then perhaps this makes sense to raise your deductible – especially if you’re accident-prone – but otherwise, it’s best not to do so unless there’s something specific that might make it worthwhile.
For example, some people insure their houses as well as their cars with the same company so they keep lower deductibles on those policies so they have a little room in case an accident occurs at home. It also means they have less paperwork in the mail to deal with.
4. Not shopping around for the best rates
“You wouldn’t go to just one grocery store when you move into a new area without finding out who has the best deals, so don’t be afraid to shop around when it comes time to renew your policy either.
Remember that just because your agent is offering you a great deal doesn’t mean others are not – especially since many of them get their insurance products from the same companies (see number three).”
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With some basic information about yourself like how old of a car you drive and where you live, there’s no reason why you can’t look up quotes online or ask an independent agent whether he or she could get you better rates than what your current agent is offering.
The worst they can say is “no,” and then you have a clear understanding of who your agent should be working for!
5. Failing to negotiate a lower price when shopping online or online.
Car insurance companies know the Internet has changed the way people buy products so many have introduced new methods to do this by themselves without going through brokers, which typically receive commissions from the companies.
In other words, if you get a quote online or sign up directly with an insurer via their website, continue negotiating until they give you a better deal than what you were originally quoted rather than taking it at face value. Or giving it back without asking any questions!
Remember that rates from last year are no indication of what it will cost you to insure your car next year so don’t assume they are accurate.
Instead, call your existing insurer for a new quote or find one on the Internet yourself before speaking with an agent at your company who might try to lower it just enough that you won’t bother looking for better deals elsewhere.
6. Not making sure all of your vehicles are listed on the same policy
Don’t assume that only your two cars are covered if you have additional vehicles – such as motorcycles, scooters, or boats – under the same insurance policy simply because they’re not mentioned specifically in its terms and conditions.
Remember, group discounts for multiple policies may apply (see number one). If something happens to one of those other vehicles while it’s being driven by you or someone else, it may be covered under your policy depending on what you’ve purchased.
If not, it will only cost you more in the long run to have separate policies for each vehicle, so double-check first before assuming otherwise.
7. Buying additional coverage without understanding exactly what they are purchasing
Most people don’t know this but there is such a thing as “full coverage car insurance.” This means your car is insured against every possible expense and hazard that could occur when driving it – no matter where in Canada you happen to be and who is driving at the time.
Some providers offer these plans bundled in with other features like roadside assistance and accident forgiveness while others offer them separately, typically at a higher price It’s worth looking into if you are planning on keeping your car for a long time but don’t get talked into buying more coverage than you need just because someone is pushing extras at the time of purchase.
8. Under-estimating how much lifestyle changes can impact your rates
If you’ve sold your motorcycle or scooter, canceled your gym membership, and stopped skiing forever, it stands to reason that these types of policy changes would have an effect on the rates you pay since there’s less risk involved in insuring them …right?
Maybe …or maybe not!
This is where insurance companies use their own logic to decide what you should be charged for certain things so unless they’re clearly spelled out in the company’s terms.
