We all have different pressures, priorities and beliefs and they affect our judgement. You may make mistakes when you don’t pay attention or pay too much attention to one particular issue. You should make balanced decisions when you purchase car insurance. Here are some of the traps you may fall in knowingly or unknowingly during the process of purchasing auto insurance coverage.
Mistake 1: Thinking Monthly Premium Instalments Are Great
Isn’t it lovely that your insurer is allowing you to pay by instalment? Think again because it is usually not a free gesture. Companies charge hefty interest when you spread your premium. It is like borrowing money to pay the premium. Premiums are due at the time of purchasing auto insurance policy and delaying payment is considered credit facility.
Companies offer this facility as many customers prefer to spread the costs. However, they may not realize that they are getting charged more for it. Furthermore, some companies offer extra discounts when you are ready and willing to pay straight away. Overall savings can go over ten percent that you should pay the full amount in one go if you can. If you don’t have the money at the time of auto insurance purchase you may want to look into alternative arrangements like paying with a credit card.
Mistake 2: Wanting to Buy Liability Only Coverage and Be Done with It
Many motorists resent that it is a legal requirement to purchase car insurance. They may just want to buy the lowest mandatory policy cover and forget about it. It is easy to go for this option since you don’t need to think about what else you may need. However, you can purchase full coverage car insurance packages without much thinking and they are pretty cost effective.
sThe price difference between full coverage and liability only policies can be minimal at times. Even it is not; you should consider paying a little bit more to make sure you are covered for liability and your own losses. Comprehensive and Collision covers are highly beneficial to pass without getting quotes. Remember companies can sell full cover packages cheaply because most people go for them.
Mistake 3: Auto Renewal of Vehicle Insurance Policies
We are made to believe that loyalty always pays. That is why many people would keep renewing auto insurance with the same company year after year thinking that they are being looked after by their current insurer. Studies showed many a times that this is not the case and loyal customers are taken for granted.
Generally, new customers get the best prices and policy packages. They need to be offered sweet deals to be persuade to make the switch. The worst of all, when your insurer improves the policies they offer they don’t automatically update your cover as well. In other words, when they start selling new model policies yours remains stuck in the year you bought it.
Mistake 4: Not Shopping Around when Buying Car Insurance
It is a follow on from mistake 3. You should always get alternative quotes at each renewal to make sure you are still getting the best deal. Also, you should get alternative quotes when there is a significant change in your life that leads to sizeable premium increase. Renewals are there to reassess your position and you should use it.
There are plenty sources for online car insurance purchase. Within a few minutes you would have a good idea what other companies would be offering you. You just need to provide a few basic details and you will be able to get quotations on the internet. Alternatively, you can always use a broker to check the prices on your behalf.
Mistake 5: Assuming all Automobile Insurance Policies Are Similar
Auto insurers are so imaginative and innovative these days. They come up with different policy packages and offer extra guarantees that it is essential to check and compare coverage from various providers. If you don’t look at your options you may be stuck with a no-frill policy while you may be able to get a few extras at next to nothing prices with smarter approach to auto insurance purchase.
Check if your policy includes things like accident forgiveness, rental reimbursement and no aftermarket parts policy for repairs. These pledges are important and tell you what type of a company you are being insured with.
Mistake 6: Ignoring to Check Deductibles when Purchasing Car Insurance
You may be thrilled to find a cheap automobile insurance policy and quick to buy it without checking deductibles. This is the portion you have to pay out of your wallet for each claim before your insurer will cover the rest. If you buy a cover with high deductibles it may defeat the purpose of insuring a car as it would be harder for you to make a claim.
Moreover, you may not be able to cover the deductible especially if you have more than one accidents in a policy term. Always keep in mind when purchasing auto insurance that the higher the deductibles the lower premiums get. So, that cheap policy may not be as cheap as you thought after all.
Mistake 7: Trying to Save by Having Parents Purchase Auto Insurance for You
It is an offence to falsely declare another person as the main driver (and/or owner of the vehicle in some cases) when they are not. Getting your parent purchase insurance for a car that is driven mainly by you is called “fronting” and a risky strategy particularly when you don’t live with them. Your claim may be declined and you may face penalties and license point deductions if you are found out.
If you want to save money you can look into legitimate options like adding an older and more experienced driver onto your policy. This is perfectly acceptable even if the person lives in a different address. Most companies consider that having a more mature and experienced listed driver on the policy will reduce the risks as a car can only be driven by one person at a time.
Mistake 8: Making False Representation & Omitting Crucial Information
You are required to provide correct and accurate details to the best of your knowledge when purchasing car insurance. And you are also required to inform insurers of material changes in those particulars relating to drivers, cars and personal details. Remember you are entering into a contract with the company based on information you provided.
Deliberately giving wrong information so that you can get cheaper premium is illegal. You may be charged with fraud as well as your claim being denied. There are examples of it already with people getting into trouble for giving different address or not telling about the bad drivers in the household.
Mistake 9: Cancelling or Not Renewing Policies Because You Don’t Drive the Car
Every vehicle kept on the public roads has to be insured to comply with the state laws. If you are keeping it in your garage or in a private space and never driving it you may be able to drop coverage. But, you are probably required to inform your local DMV of the position and sign a declaration to the fact that you are not driving it and it is off the road. Otherwise, you may receive penalties for owning a vehicle without a valid insurance.
Another problem may be that you may have to pay much higher premiums when you decide to buy auto insurance for either the same car or another one. Lapse in car insurance coverage is noted by insurers and gets penalized. Alternatively, you may be able to keep the policy in force by paying minimal premium.
If you speak to your insurer and explain the situation they will be able to offer you huge discounts since you drive zero miles and it is kept in a locked garage. This will offer you essential fire and theft coverage as well as keeping you legal and allowing to maintain unbroken coverage record.
Mistake 10: Making Vehicle Modifications without Checking Insurance Implications
You may get carried away and make changes to your automobile that increases your premium well over your budget. This could be the case when you make speed or power enhancing changes. You can be charged a lot more money simply because your auto isn’t in its original state anymore. Always check with your insurer before you make changes. One of the common car insurance mistakes to avoid is not to inform your insurer of these modifications.
Finally, it is a good idea to check the insurance costs of a new car you consider buying. If you go ahead and purchase an auto and find out the premiums for it will be very high compared to another model, it is too late. By being a little attentive to details you can manage to purchase auto insurance coverage that is effective and cheap.