12 Mistakes You're Making When Buying Car Insurance

Shocked woman in car reading insurance paper


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Asian woman having problem about her car breakdown and she trying to call insurance or someone to help her.

Car Insurance Blunders

Picture this: You're happily cruising along, windows down, tunes blasting, when suddenly — BAM! You get into a fender bender because the guy behind you was texting instead of keeping his eyes on the road. What a nightmare, but you know what's even worse? Not having insurance to help you pay for the damages. 

While nobody likes having to buy car insurance, it's a necessary expense (and illegal in most states to drive without it). Here are 12 common mistakes to avoid while shopping for car insurance to help you maximize savings and find the best policy.

man searching a car insurance on his smartphone

Not Shopping Around

Forgetting to shop around and compare insurance policies is like settling for the first date that comes along — they may not be the best fit for you. Taking the time to compare quotes from multiple insurers to find the coverage that best suits your needs and budget can help you save big. Remember, while dealing with insurance companies can be a tedious process, putting in the effort now can save you big bucks down the road.

Man stealing a car

Underestimating Coverage Needs

Don't fall into the trap of skimping on coverage just to save a few bucks. Sure, it might seem tempting to go for the bare minimum, but if someone breaks into your car or an unexpected accident happens, you'll be left footing the bill for all the damages. Assess your needs, consider factors such as your driving habits, location, and the value of your vehicle to opt for the best coverage that will protect your property and finances. 

car crash accident on the road

Ignoring Deductibles

While a low deductible might sound appealing, it often comes with higher premiums. On the other hand, a high deductible can help reduce your monthly premium, but means you'll likely have to pay more out of pocket should you need to file a claim. To avoid this, strike a balance between the two by choosing a deductible that aligns with your financial comfort zone and budget. 

Concept of car insurance business, saving buy - sale with tax and loan for new car. Car toy vehicle with stack coin money on background. Planning to manage transportation finance costs. loan for car
Jinda Noipho/istockphoto

Not Checking for Discounts

Don't leave money on the table by ignoring potential discounts or seasonal promotions. Insurance companies typically offer various discounts for factors such as safe driving records, bundling policies, installing anti-theft devices, etc. When in doubt, don't be shy to inquire about available discounts that could be applied to your policy to help maximize savings or reduce your monthly rate. 

Related: Most Expensive Cities for Auto Insurance

Selective focus of magnifying glass,glasses and Insurance Policy letter on a white wooden background.
Mohamad Faizal Bin Ramli/istockphoto

Failing to Review Your Policy Regularly

Life changes — and so do your insurance needs. Forgetting to review your policy regularly can lead to outdated coverage or missed opportunities for savings. Take the time to reassess your policy at least once a year, update any changes in your circumstances, and check in with your insurance provider to ensure that you have the appropriate coverage at the best price.

Related: 13 Ways to Save on Renters Insurance

Credit score report

Having a Poor Credit Score

Believe it or not, your credit score can impact your car insurance rates. Since insurance companies often use credit information to assess a buyer's risk, having a good track record such as paying bills on time, reducing debt, and maintaining a good credit score can help you secure better rates and lower your premiums down the road. (If you find errors on your credit report, consider using our guide to learn how to dispute them). 

Hand of man signing signature filling in application form document

Lying on Your Application

When it comes to insurance, honesty is the best policy. Here's why: If you get caught lying on your application and need to file a claim, the insurer may investigate your information, uncover the deception, and deny coverage. While the truth may not always be glamorous, it's certainly cheaper than having to foot the entire bill should your insurer deny a claim or decide to cancel your policy entirely. 

Renters Insurance policy agreement and key from apartments.

Forgetting To Bundle Policies

If you have multiple insurance needs, bundling your policies with one insurer can often lead to significant discounts. Whether it's combining your car and home insurance or adding extra coverage such as renters or life insurance, bundling can offer convenience, streamline your insurance management, and ultimately save you some serious dough. (And now I can't get Flo from Progressive out of my head.) 

Senior Hispanic woman working on computer at home

Not Looking Into Your Insurance Provider

When selecting an insurer, it's important to make sure it's a reputable and financially stable company. You want to ensure that they have the financial strength to fulfill their obligations in the event of a claim. To verify this information, check ratings from independent agencies such as A.M. Best or S&P Global Ratings to assess an insurer's financial health and reliability.

Plan Your Driving Schedule Strategically

Neglecting Usage-Based Insurance

If you don't drive much or have low mileage on your vehicle, usage-based insurance could provide you with a more cost-efficient option. By installing a telematics device or using a mobile app, insurers can monitor your driving habits and potentially reward you with lower premiums based on your driving habits and risk. 

Where to Drive a Pricey Sports Car
Lou La Vie/facebook.com

Buying a Car That's Expensive To Insure

Choosing a car that's expensive to insure can feel like setting yourself up for a financial rollercoaster. These vehicles often come with higher insurance premiums due to factors like higher repair costs, theft rates, or powerful engines that tempt you to drive a bit too fast. So while that fancy sports car may look super sleek and cool, be prepared to fork over a hefty chunk of cash to keep it protected on the road.

Young woman talking on smart phone at home office

Ignoring Customer Service and Claims Processes

Sometimes pricing isn't all that matters; after all, you can't buy peace of mind. To avoid dealing with a sketchy insurer, research their reputation in terms of customer satisfaction and claims handling. Read reviews, talk to friends and family, and consider the insurer's responsiveness and efficiency when it comes to handling claims. Remember: Excellent customer service can make a world of difference when you're in a pinch, and dealing with insurance claims is stressful enough. 

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