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 incidents.
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?
- If not, rental reimbursement coverage may be valuable to you.
- Do you pay for roadside assistance through AAA or another company?
- If not, you may wish to add emergency roadside service coverage.
- Is your car new or very valuable?
- If you stand to pay a lot in the case of damage to your vehicle, you might consider collision and/or comprehensive coverage.
- 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.