10 Costly Auto Insurance Mistakes

When looking to renew, switch or get it for the first time, it is a good opportunity to assess current coverage needs. Many motorists forget about all the circumstances that can cause them undue financial hardship, which can be negated simply by buying the right policy. 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 protection. Consider these 10 situations that can be costly if you haven’t taken everything into account and failed to make sufficient arrangements.

  1. Driving without Automobile Insurance

This sounds stupid to many motorists but not to about 15% of Americans. Driving uninsured is probably the biggest mistake in relation to vehicle ownership. Both the driver and owner are responsible to ensure they have at least minimum liability. 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 convinced that you need insurance to drive.

  1. Custom Racing Parts

If you have a vehicle that has been modified with special parts or processes and have not informed the carrier, 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 for the investment and make sure claims are paid, if you ever have one.

  1. Custom Car Modifications

Separate from racing there are millions of disabled drivers with modified cars. People make alterations to automobiles for other medical or age related conditions too. These changes, just like racing parts are not included under a traditional policy. Ensure you have this vital mobility coverage.

  1. Carrying Custom Equipment

Whether you have a very expensive hobby that requires you to transport expensive 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.

  1. Being UnderInsured

Probably one of the largest miscalculations that drivers make is simply not buying enough coverage. Every state has an average claims settlement range for minor to severe accidents. Liability limits should be two to three times the maximum in this range. Depending on the state the settlement range could be as low as $15,000 or as high as $100,00 requiring liability from $50,000 to $300,000. There is no upper limit to these claims and therefore, you need to make sure you know what is the minimum liability car insurance and go well above it.

  1. 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 outlaying hundreds. 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. If you are confident that you are unlikely to make claims in the near future because you have a good history you may not worry about the out of pocket payments. You can read how do deductibles work on this post and try to get a good balance.

  1. Not Getting Accident Forgiveness

Many companies offer an ‘accident forgiveness’ add on, depending on location to ensure that the first accident does not affect premiums. Where an accident can increase 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 it is offered after about 5 years of no claim history. After finally qualifying for it, ignoring this little add-on can be an expensive vehicle insurance oversight if you end up getting involved in an accident.

  1. 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, low mileage, safe car discounts and more. Never forget to find out what discounts you might be missing. Qualifying for most of them or finding a carrier that offers the largest savings can make a real difference. 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 monthly plan but you should get a few alternative quotes at least once a year.

  1. 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 policy to see if it will pay for traffic accident related injuries. You may need to supplement this with increased Medical Payments Coverage from an auto insurer.

This addition will make sure that your family and you are properly protected for injuries suffered as a result of traffic incidents, including loss of wages and other consequential losses, especially if you are living on a tight budget. You may be more inclined to drop it when you are worried about the costs. But you need to think what happens if you are involved in an accident and injured.

  1. Insuring Lost Wages and Ability to Work

The last and potentially the most important piece is ‘work-loss’ and mobility issues that could avoid a large financial burden should you be injured in an accident. If you depend on the vehicle for work, Rental Reimbursement add-on is a must to ensure you can continue getting to work. If you are injured and cannot work during the recuperation period, Income Replacement is the only way to ensure financial viability during this period. Health cover isn’t likely to provide it but PIP can offer lost wage compensation.

A bonus tip to ensure you get the best possible protection at the best possible price is by using an online comparison shopping tool such as the one provided free by us above. Make sure to compare apples to apples by getting quotes for the same details. Looking at just the price can be another costly mistake that can be avoided by having a bit longer term view of things.