7 Sins You Shouldn’t Make in Car Insurance

Sometimes you learn after a claim that you chose the wrong policy. (stidge.com)

As everyone knows, or should know, car insurance is required by law in 49 states and the District of Columbia. It’s something each of us must purchase, even though it’s a product we hope we never have to use.

And while everyone has their own, unique situation, there are some general rules that make sense when applied to everything. While they’re not the seven deadly sins, here are seven things you should never do when it comes to car insurance:

1. Thinking minimum coverage has you covered

Family finances can lead to looking at the temptation of simply selecting state minimum liability coverage. Yes, you might save a few dollars, but crashes can exceed the ridiculous, out of date minimums dictated by state laws.

Many states only demand a driver have $10,000 to $20,000 in bodily injury coverage, but that isn’t enough for crashes that result in serious injury or death. State minimums are woefully out of date, in most cases.

We recommend that drivers carry at least $100,000 of bodily injury coverage per person, and a minimum of $200,000 per accident. Why?

Because if you’re found to be at-fault for a crash that causes significant injury or death, you’ll need those coverage amounts. Without them, your savings, investments and even your home could be at risk to satisfy your liabilities.

2. Shopping on price alone

There’s no doubt that carrying minimum coverage appears to be an attractive option from a financial point of view, at least in a short-sided way.

Shopping on nothing more than price alone is also a questionable policy. You have to consider more than price, such as the financial stability of the insurer as well as your coverage options.

That doesn’t mean that the cheapest insurance won’t prove to be your best option in the end. But you’ve got to ensure to take the few minutes of your time it will require to check into factors other than just the policy premium.

3. Waiting on discounts to be offered

Every insurer offers discounts, and they have a wide range of them available. For example, most insurers quote policy premiums based on the miles you drive. If you drive an extremely low number of miles each year, you’re probably eligible for a substantial discount on that factor alone.

And don’t expect an insurer to automatically give you every discount you may be eligible for. They can’t offer you discounts without knowing exactly which ones you qualify for, so make sure to ask.

There are plenty of easy discounts you can take advantage of, such as paying your policy premium in full or signing up for paperless billing. Others include belonging to an alumni association, completing advanced or defensive driving courses, or even installing a new anti-theft device in your car.

4. Expecting customer loyalty to be your best bet

If nothing else, car insurance customers are a solidly loyal bunch, and the vast majority of customers are happy with their current car insurance company.

But just because you’ve been loyal doesn’t mean your current insurer is the best option for you. Yes, it’s difficult to switch insurers, but if that offers you the best possible performance and the biggest bang for your buck, why not go for  it?

As an added bonus, many insurers will now apply your time with other insurers, transferring any loyalty discount you’ve obtained simply because of the length of time you’ve been with another company.

5. Not obtaining quotes before you buy a new car

Of controllable factors in terms of car insurance prices, the car you select to purchase falls into this category. It will have a tremendous impact on what you’ll pay out in car insurance premiums, it’s a wise decision to consider factors beyond just the purchase price of a car – including obtaining quotes before you buy.

We realize that attractive lease deals or customer incentives like rebates can make a car seem as if it is a “must buy.” But every car is rated differently by insurers, so its important to obtain quotes before you sign on the dotted line.

6. Not dropping coverages on older cars

One of the best things about driving an older car is the lack of a monthly car payment. And they can also provide significant savings since cars without much value don’t need the protections of collision or comprehensive.

This doesn’t mean you should just purchase state minimum coverages, but you can get a liability policy with appropriate levels of coverage on older, low-value cars and come out ahead solidly.

7. Failure to assess your auto insurance needs

Ideally, we say smart consumers will conduct an assessment of all their insurance needs, every year at a minimum. Auto, homeowners or renters and life insurance policies should all undergo the microscope.

Think about all the changes that took place in the past year. Were any of them major life changes, such as switching jobs or retiring? Moving? Major life changes, even innocuous events such as having a new baby, can impact the price you pay for your policy.

Even if nothing seems to have changed, you might be eligible for a new rate – something insurers don’t normally broadcast, unless they’re making a blanket change or terminating policies.

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