When looking to renew your auto insurance policy, switching carriers or getting car insurance for the first time, it is a good opportunity to assess your current coverage needs. Many drivers forget about all the circumstances that can cause them undue financial hardship, which can be negated simply by buying the right coverage. You can avoid making common car insurance mistakes if you pay just a little attention. Once you get a few basics right you can take comfort from arranging the right policy. Consider these 10 situations that can be costly if you are not covered with the right policy.
- Driving without Auto Insurance
This sounds stupid to many motorists but not to about 15% of American drivers. Driving without car insurance is probably the biggest mistake in relation to driving and vehicle ownership. Both the driver and owner are responsible to ensure they are properly insured. Not only you are taking a chance on getting caught and fined but also causing a serious accident that can ruin you financially. Read this post if you are not sure do you need insurance to drive or not?
- Custom Racing Parts
If you drive a vehicle that has been modified with custom parts or modifications and have not told your insurer, there is a large possibility that an accident claim would be denied. These parts enhance vehicle’s performance and this may be seen as the main reason for the crash, hence the denial. Get Custom Parts coverage to protect your investment and make sure your claim is paid, if you ever have one.
- Custom Car Modifications
Separate from racing modifications there are millions of disabled Americans who drive modified cars. People modify automobiles for other medical or age related conditions too. These modifications, just like racing parts are not covered under a traditional policy. Ensure this vital mobility is covered in your insurance policy.
- Carrying Custom Equipment
Whether you have a very expensive hobby that requires you to transport expensive custom equipment or you have a health condition, this specialized equipment is often not covered under a regular policy. Replacing wheelchairs, acetylene torches or other equipment can get quite expensive when not covered.
- Being UnderInsured
Probably one of the largest single mistakes that drivers make in their insurance policies is simply being underinsured. Every state has an average claims settlement range for minor to severe accidents. Your auto insurance should be two to three times the maximum in this range. Depending on your state the settlement range could be as low as $15,000 or as high as $100,00 requiring liability insurance from $50,000 to $300,000. There is no upper limit to liability claims and therefore, you need to make sure you are insured properly. Find out what is the minimum car insurance you need?
- Not Checking the Deductible
If you do not have large cash reserves, a high deductible policy may not help you financially survive a severe accident. The few extra dollars per month to have a lower deductible could save you from out-laying hundreds in deductibles. This could be a real problem when you don’t have the money readily available. On the other hand, you may need to pay a little bit more for a lower deductible policy. You can read how do car insurance deductibles work on this post and try to get a good balance.
- Not Getting Accident Forgiveness
Many insurers offer an ‘accident forgiveness’ add on, depending on your location to ensure that your first accident does not affect your premiums. Where an accident can increase your premiums for several years, this option is indispensable. Accident forgiveness is usually not expensive when it is offered but you should check the costs before making your mind up. Normally accident forgiveness is offered after about 5 years of no claim history. After finally qualifying for it, ignoring this little add-on can be a costly auto insurance mistake if you end up getting involved in an accident.
- Forgetting about the Discounts
This may seem simple but many motorists ignore this part of buying auto insurance. After getting numerous quotes, start asking about the many discounts available including credit score, GPA, good driving record, Affinity programs, professional career discounts, low mileage, safe car discounts and more. Never forget to find out what discounts you might be missing. Qualifying for most of the discounts or finding an insurer that offers the largest savings can make a real difference to your premium. You should always shop around for the best deals at each renewal. You may not like to shop around every time if you have a 6 month car insurance but you should get a few alternative quotes at least once a year.
- Checking Your Health Insurance Cover
Only 12 states require Personal Injury Protection as part of their ‘no fault’ systems. In all other states you need to check with your own medical insurance coverage to see if it will cover an at-fault accident that you caused and its coverage. You may need to supplement this coverage with increased medical payments coverage from an auto insurer.
This additional cover will make sure that your family and you are properly covered for injuries suffered as a result of traffic accidents, including loss of wages and other consequential losses, especially if you are living on a tight budget. You may be more inclined to drop coverage when you are worried about the costs. But you need to think what happens if you are involved in an accident and injured.
- Insuring Lost Wages and Ability to Work
The last and potentially the most important piece of auto insurance is ‘work-loss’ and mobility issues that could save your finances should you be injured in an accident. If you depend on your vehicle for work, rental car insurance is a must to ensure you can continue getting to work. If you are injured and cannot work during your recovery period, income replacement coverage is the only way to ensure your financial viability during this period. Your health insurance isn’t likely to provide such coverage but Personal Injury Protection can offer lost wage compensation.
A bonus tip to ensure you get the best possible coverage at the best possible price is by using an online car insurance comparison shopping tool such as the one provided free by us above. Make sure to compare apples to apples by getting your quotes on the same coverage bases. Looking at just the price can be another costly car insurance mistake.