Shopping for car insurance can be difficult and tiring. But skirting the process could mean wasting money at best and putting your savings at risk at worst.
As a driver you don’t want to skip auto insurance at all, but when choosing the right company or policy, even a small mistake can prove costly.
The following insurance-buying mistakes can easily cost you hundreds of dollars per year – and potentially shave thousands of dollars off your net worth.
1. Failing to shop around
You’ll have to shop around to find a good deal on car insurance – and know a good deal when you see it.
Policy pricing can vary widely from one insurer to another, and you could save hundreds of dollars per year just by comparing prices.
It’s easier than ever to do this, thanks to online rate comparison tools, like this one from Insurify. With just a few clicks, it streamlines the car insurance shopping process and shows you rates from companies in your area.
2. Making decisions based only on price
Making an auto insurance decision based on price alone can be an expensive mistake.
Saving hundreds of dollars a year in premiums may not matter if you’re responsible for a car accident and later discover you have inadequate coverage. Such a poor decision could cost you thousands of dollars.
If you find an affordable policy, make sure it has all the protections and features you need. Stacey Johnson, founder of Money Talks News, explains how to do it step by step in “How to Get the Best Possible Deal on Car Insurance (I’ve Saved Hundreds of Lives by Doing This).”
3. Purchasing the Minimum Coverage Required by State Law
The minimum amount of coverage your state requires – minimum. This may be grossly inadequate.
Take liability coverage, for example, which pays for damage you cause to other people or their property. Stacey describes this as “the one area of your car policy where you don’t want to skimp”.
If a court rules that you are responsible for an accident involving serious injuries or significant property damage, the minimum amount of liability coverage probably won’t be enough to protect financial assets like your savings. You may have to pay thousands of dollars out of pocket after your policy pays out.
4. Non-investigation of complaints against insurers
Before purchasing a policy, check with your state insurance department to find out if there are any complaints against the insurer you are considering.
Ask about enforcement actions and find out if your state publishes complaint ratio reports. These reports tell you whether an insurer receives more consumer complaints than average.
you can do it too Search for complaints Against insurers through the National Association of Insurance Commissioners website.
5. No side by side comparison
Once you’ve narrowed down the choices to a few policies, compare them closely to make sure the one you choose has the right coverage.
For example, you may want uninsured motorist coverage, which helps pay for accidents caused by uninsured drivers.
You may also want comprehensive and collision coverage, which pays for damage caused to your own car and also if your car is stolen or damaged.
6. Buying more coverage than you need
Just as it is possible to purchase too little coverage, it is also possible to purchase too much. Excessive coverage is a waste of money.
If you have few assets, you probably don’t need as high a liability limit as someone who has a lot to lose. If it wouldn’t be expensive to replace your car, you may be able to make do with less collision or comprehensive coverage or drop that coverage altogether.
Also beware of unnecessary policy add-ons. If you already belong to an auto club that offers roadside assistance, you don’t need a policy that offers the same service.
7. Sticking with the same insurer year after year
Car insurance is highly competitive. It’s possible to reduce costs by hundreds of dollars per year simply by switching to another carrier.
When your next bill comes, note the coverage you have and ask for quotes from other insurers to find out if you’ll save by switching.
You can do this by contacting insurance agents directly, filling out forms on insurers’ websites, or using a service like Insurify. To do the legwork for you.
If you get a better deal but want to stay with your current company, let your agent know. Your insurer may match or even beat another company’s offer.