Auto Insurance Mistakes to Avoid Author:    Posted under: Auto InsuranceAuto Insurance questions answered

Many people view auto insurance as a necessary evil. It’s a requirement for all states in order for you to be able to drive. However, don’t just go out and buy the first and cheapest coverage you find. You will find below the common mistakes motorists commit when looking for and purchasing auto insurance coverage.

Assuming the bare minimum required by law is adequate. The most common mistake people make is purchasing only the minimum required by their state law and think that they will be just fine in the event of an accident. That is why most of these people end up underinsured. What’s more, if you are covered for only $10,000 and you cause a damage of $15,000 to another car, you’re going to have to shoulder the balance of $5,000. If you aren’t capable of paying for a large amount of money as such out-of-pocket, you will be forced to borrow and you will end up in debt. You may be better off choosing a more expensive policy.

Selecting a policy solely for the cost and not the scope of coverage. It’s normal for people to do a little comparison shopping before selecting one policy. So no matter how tempting it is to go for that cheapest policy, also consider the extent, limitations and exclusions. Also be wary of low-premium policies, more often than not, the deductibles are hefty. As mentioned above, if you cannot afford to shoulder huge expenses out-of-pocket, high-premium, low-deductible policies are the way to go.

Withholding information from your insurance company. Some people think that fabricating the truth when applying for auto insurance just a little bit won’t hurt. Surely a few tickets and a couple of minor accidents wouldn’t be discovered? Truth is if your omission or your lies are found out, you can get in serious trouble with your insurance carrier. If you are caught before your application is approved, you may be asked to provide an explanation or your application may be instantly rejected. If you are caught before you have had a need to file a claim, either your premiums will be raised significantly, or your policy may be cancelled due to misrepresentation. However, if the lie is caught when the time comes for you to file a claim with your insurance company, your claim may very well be denied or your policy cancelled due to misrepresentation.

Purchasing an auto insurance policy without understanding it. Before you even purchase your auto insurance policy, make sure that you have read and understood everything – the scope of coverage, limitations and exclusions. If you have questions, or wish to clarify certain details, don’t hesitate to call the customer service department of the insurance company, or talk to your insurance agent.

Failing to look at other types of coverage appropriate to your need. You have an old car that’s in disrepair. In this case, buying collision and comprehensive coverage will only cost you more money than it’s worth. On the other hand, if you have an expensive, vintage car you will need a more specialized kind of car insurance such as classic car insurance.

Make sure that you look at all possible auto insurance types, and compare prices from different insurance carriers so that you will get the best possible fit for your needs and your budget.


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