Do You Make These 7 Common Mistakes On Your Car Insurance?
Insurance is an important tool for protecting your assets — but that doesn’t mean you should pay more than you have to. Reviewing your car insurance policy is probably at the bottom of your to-do list, but it’s time to bite the bullet if you want to save yourself money and avoid the trap so many of us fall into: paying our premiums month after month without ever a second glance.
If you’re like most people, you’re probably making a couple of big mistakes on your car insurance that could be costing you hundreds every year. Wouldn’t you prefer to have that money back in your pocket?
Without further ado, here are seven mistakes you can avoid to keep insurance costs under control.
1. Not Asking for Discounts
Don’t assume your insurance agent will automatically add discounts to your policy if you don’t ask. Discounts available vary by company, but potential discounts you could be missing includes: taking a new job with a shorter commute, carpooling, being a long-time customer, having a good driving record, driving a vehicle with safety and security features like an audible alarm or VSC and even parking your car in a garage instead of on the street.
2. Staying with the Same Insurer for Years
So you shopped around, got several quotes and ended up getting insurance through the company that offered you the lowest rate. But that was years ago; have you bothered to check if another company will give you a better rate today? Insurance companies know that most customers will give in to inertia, allowing them to steadily increase premiums.
Insurance companies also tend to reserve the best rates for their newest customers. If you’re a long-term customer, they know there’s less chance that you’ll leave.
When you go through a major life change, such as moving to a new state or getting a new car, it’s time to start comparing rates again. You should also start comparison shopping whenever you’re hit with a rate increase. You should always have a good idea about current car insurance rates to make sure you’re not paying more than you need to.
3. Keeping Your Deductible Too Low
The lower your deductible, the higher your car insurance rate. Sure, a low deductible will reduce the amount you need to pay in the event of an accident, but you’ll probably end up paying more for that benefit in the long run. Increasing your deductible from $250 to $500 or $1,000 will make an accident that much more expensive, but you’ll save up to 40% on the comprehensive and collision portion of your car insurance policy.
Not everyone should raise their deductible, however. If you don’t have enough money to cover the deductible in savings, you could face the possibility of not getting your car back from the body shop until the bill is paid. Proceed with caution, and make sure you choose a deductible you can afford.
4. Paying in Installments
Paying your car insurance in monthly installments definitely seems like an easy way to manage the expense, but it’ll end up costing you more than a lump sum payment. Insurance companies add convenience fees to installment payments and this can really add up over time. A monthly fee of just $7 can add up to close to $100 every year!
5. Not Combining Insurance Policies
If you have several insurance policies — such as car, home, homeowners/renters and life insurance — shop around and see how much you save if you combine these policies with the same insurance carrier. A multi-line policy can usually save you around 15% on your premiums.
6. Buying the Minimum Coverage to Save Money
While many people overpay for insurance, there are others who buy only the minimum coverage to save money, in many cases exposing themselves to unnecessary risk and failing to cover their assets. A very high deductible and insufficient liability coverage will save you money in the short term, but you may end up paying thousands in repair bills if you get in an accident.
7. Choosing limits based on state minimums
Car insurance companies won’t sell you insurance below state minimum requirements, but this doesn’t mean you should necessarily choose those minimums. If you do, you may leave yourself with huge out-of-pocket costs if you need to make a claim. If your state requires a $10,000 minimum for property damage and you cause $15,000 in damage to a high-end vehicle, you’ll be responsible the remaining $5,000.
When you choose insurance limits, consider the size of your vehicle and how much damage it can cause.
Avoiding these common insurance mistakes will help you choose the right auto insurance policy to protect your assets and save you money.