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Common Mistakes When Buying Car Insurance

Car insurance is not a one-size-fits-all proposition. Determining exactly what your auto insurance should cover and how much you should pay for it can be tricky and confusing.

Avoid these common mistakes to get the best car insurance for your needs at the best price for your budget.

Not Being Prepared

Shopping for car insurance impulsively and deciding on a policy without the appropriate preparation can leave you paying too much, getting the wrong coverage, or both.

See below for some common mistakes shoppers make when in a hurry to buy insurance and how to avoid them.

Shopping Without Preparation

Before you even ask for car insurance quotes, do some research so you can make informed comparisons and choices.

At the minimum, you should know the answers to the following questions:

  • How much car insurance coverage does your state require?
  • If your car isn't paid off, how much additional coverage does your lender require?
    • For example, are you required to hold collision and comprehensive coverage?
  • How much can you afford to pay for monthly premiums?
  • How much can you afford to pay out of pocket in case of an accident?

The answers to these questions will help you establish a baseline for how much auto insurance to buy and how much you can pay.

Not Doing Research

All insurance companies are not created equal. Some are much better at service than others. Before you decide where to buy your car insurance, check out the reputation of different companies online and through friends.

Check out your auto insurance company's complaint ratio at the National Association of Insurance Commissioners website.

Not Knowing Your Needs

Without adequately assessing your needs, you can end up with a car insurance policy that provides insufficient protection in the case of an accident or other incident.

See below for the mistakes insurance customers make when electing coverage types and limits, and how to avoid these mistakes.

Not Buying Enough Car Insurance Coverage

In most states, the minimum required coverage, usually called compulsory insurance, is not enough to fully protect your assets.

State minimums for bodily injury and property damage liability coverage range from $10,000 to $50,000 per person in one incident/accident.

If you're in an accident where the other party’s damages exceed your coverage, you could be sued and held liable for the remaining costs. Speak with your auto insurance agent and thoroughly assess your needs to make sure you buy enough car insurance to protect you in case of an accident.

Learn about your state's minimum insurance requirements in our car insurance requirements section.

Not Understanding Your Needs

Optional coverage can come in handy, but may add more to your premium than it's worth. Before you get car insurance quotes, ask yourself these questions to help you decide whether additional options are worth their cost to you.

  • Do you have transportation available if your primary vehicle is in the shop?
  • Do you pay for roadside assistance through AAA or another company?
  • Is your car new or very valuable?
  • Do you have a loan or lease on your car?
    • If you have a loan and your car gets totaled, you may have to pay the balance between your car’s current actual cash value and your loan amount, and it can be big.
    • Gap coverage is a good option for you if you have a loan.

Learn more about the many types of optional car insurance in our Coverages section.

Carrying Collision and Comprehensive When You Don't Need It

Can you afford to replace your vehicle if it's stolen or totaled? Evaluate whether or not it's cost-effective to continue paying for comp and collision after your car is paid off.

You might consider dropping these optional coverages if the premiums are more than 10% of your car's total value.

Check your car's value at the Kelly Blue Book website.

Choosing a Deductible That Isn’t Right for You

Most policies require you to pay a certain amount, called a deductible, before your car insurance coverage kicks in after an accident or other incident.

Carefully consider your budget when choosing your deductible. While raising it can lower your monthly premiums, it may be too much to pay out of pocket after an accident.

Be honest with yourself about whether you’ll be able to pay that $1,000 deductible at a moment’s notice.

Not Shopping Around

Every car insurance company uses its own set of parameters to analyze risk and decide how much to charge, which means that two insurance companies can offer the exact same coverage at very different prices.

Get multiple car insurance quotes to make sure you're getting the best price.

NOTE: While it’s important to check around for price, don’t let that be your only measure of a company. The cheapest car insurance policy isn’t necessarily the best car insurance policy. You’ll want to make sure you get good coverage and quality customer service as well.

Other Mistakes When Shopping

Lying on Your Application

It's tempting to distort the truth in order to get a lower premium, but lies can come back to haunt you later.

If your car insurance company finds out you've omitted or given false information on your quote, they can cancel your policy and refuse to pay any claims.

Leaving Discounts on the Table

Always ask about any discounts that may apply to your policy. Some common discounts include those for:

  • Paying your policy in full.
  • Making monthly payments via EFT.
  • Bundling your auto insurance with homeowners' insurance.
  • Insuring more than one vehicle on the same policy.
  • Low mileage discounts.
  • Good driver discounts.
  • Good student discounts for young drivers.

For more information, visit our section on auto insurance discounts.

Not Updating Your Car Insurance After a Life Change

Life changes, such as marriage or divorce, can have a major impact on your coverage needs and your rates.

For example, when you add a teen driver, get married or divorced, have a child, or buy a new car, you should let your car insurance company know. You may be eligible for a discount for which you weren’t previously qualified, or you may need to switch up your coverages.

Be a Smart Customer

By doing your research and comparing car insurance companies, you can ensure you find the right coverage at the most affordable price point. A little leg work up front can save you from overpaying on your policy and/or risking your assets by electing the wrong coverages or the wrong limits. If you are confused about what you need, check our Coverages section and talk to an insurance agent.