Top Car Insurance Mistakes

January 27, 2012

Understanding car insurance means, to begin with, knowing the top car insurance mistakes and how to avoid them. Getting auto insurance is a lot easier if you go into the process fully informed. You may still have questions for your agent, but you will likely just need some clarification about things you already know. A few auto insurance tips can help you steer clear of some of the more common mistakes people make. That way you will avoid any bad car insurance decisions that could hurt you down the road. Consider these top car insurance mistakes and their potential ramifications

  • Setting coverage limits according to state minimum. Your state of residence mandates that you must maintain a minimum level of coverage in order to legally drive. For property damage, this usually is no less than $10,000, while personal injury liability starts around $50,000. Depending on the car you drive, however, the state minimums might not be adequate to cover your expenses should you get into an accident. If your SUV destroys a BMW, chances are the minimum property damage coverage won't even come close to taking care of the bill. You, then, will be stuck with the remainder. It is a wise choice to set your limits based on the car you drive, not the minimum requirements
  • Evaluating a policy based on price rather than coverage. It is a mistake to choose a car insurance company based solely on the price of the premium. You may find the lowest price for coverage, but what they offer might pale in comparison to what a competitor offers for just a few dollars more. When comparing policies from different companies, even if the prices are about even-keeled, be sure to look at the details of the coverage so you know exactly what you're getting for your money
  • Fudging your driving history. You may get a great quote from an insurer by leaving out important details of your driving history, but it will come back to haunt you. Quotes are topical. The insurance companies do not methodically scan your background until after the quotes have been given. If you decide to leave off traffic violations, a DUI, accidents or claims, you can be sure the company will find them when they check your driving history.The quote might have been great, but the premiums won't be
  • Supposing all insurance companies are equal. Insurance companies do, by and large, offer the same general services, but they are certainly not all identical. Not only do they differ in price, but they vary in terms of convenience, the options they give you for repair, and even the brand of parts they use. It helps to have a list of questions that cover these details when you speak to your agent so you know exactly what they offer. Knowing what you are paying for helps too, so you don't double cover yourself. If, for example, you pay for AAA service, why pay your insurer for what you already get from AAA?

Auto insurance is much more than simply finding the lowest price and the minimum coverage. There are many things to consider when you're looking for insurance and many questions to ask. It pays to know what kinds of mistakes people commonly make with car insurance so you can avoid them in the future.

The Top Car Insurance Myths Exposed

The top car insurance myths have been around for a long time. Some of the car insurance secrets are totally not true, and here are the main myths.

  • Red cars are expensive. Many people believe that red cars are more to insure than any other color. People may think of red as being a wild color, but that doesn't translate to reckless or wild driving. The fact is that the car color won't make a difference, and your red car will cost the same as someone else's blue or white car. There are other factors that go into the price of car insurance, but color is not one of them
  • 100% coverage. People believe that if they have insurance, they are covered no matter what happens to their car. Your car may be broken into, damaged, or even stolen, however, it may not be covered under your policy. Basic coverage may not encompass this, so you have to add to your policy in order to get this extra protection
  • Gap insurance. Some people think that if you total your car, you will be covered for the whole vehicle, and even have your loan paid off. If you owe money, you will still have to pay it, contrary to popular belief. The only way you are covered if you owe more money than the total value is if you purchased gap insurance. This insurance pays for the "gap" between what you owe on your loan, and the value of your totaled car
  • Thieves like new cars. The theft of new cars most certainly happens, but the myth that thieves like new cars more than old ones falls into the category of "wrong." According to the National Insurance Crime Bureau, it's the other way around. The top three stolen cars are the 1995 Honda Civic, the 1991 Honda Accord and the 1989 Toyota Camry
  • Sports cars require higher premiums. This myth is based on the assumption that drivers of sports cars go faster than drivers in non-sports cars, and thus accrue more speeding tickets. More tickets, of course, leads to higher premiums. Some studies suggest, interestingly enough, that the leading committers of moving violations are drivers of Hummer products

It's wise to separate the myths from the facts, especially when dealing with car insurance. Don't be misled by what "they say". It's easy enough to find out the truth for yourself.