10 Auto Insurance Shopping Mistakes and How to Avoid Them


95% of households in America own at least one car, so if you’re a car owner you’re in good company! These vehicles are invaluable for work, running errands, socializing, and going to vacation. However, it is important that you properly maintain your car and licensing if you are going to make the most of it.

In 49 American states, an active car insurance policy is a legal requirement. This means that if you let your policy lapse or do not have one, you could receive a huge fine for taking your car out on the road.

Fortunately, it is easy to renew or sign up for an auto insurance policy. However, with so many auto insurance options available nowadays, finding the best deal for you can feel overwhelming. And there are plenty of auto insurance shopping mistakes you need to avoid if you’re going to get the right coverage!

Want to know more? Then read on to find out the top ten mistakes to avoid when choosing auto insurance providers.

1. Sticking With Your Old Auto Insurance Policy

If you already have auto insurance then it can be tempting to let it renew automatically. This means that you will continue getting the same coverage for your car from your old company. However, this isn’t always the best way to get a good deal.

In fact, some companies increase their premiums when you renew your policy, so you may end up spending more for the same coverage. While this saves you time looking for a new deal, it won’t help you financially in the long run.

In comparison, a lot of insurance companies offer great introductory deals to new customers. This means that you could actually save money by switching car insurance providers.

If you are planning to cancel your car insurance contract, make sure that you do this in plenty of time. Once your policy has renewed you may find yourself tied into the contract for another year. So make a note of your renewal date and start looking for a new policy four weeks before this!

2. Not Looking for the Coverage You Need

When it comes to finding a great deal on car insurance, you need to look at more than the bottom line that you’ll end up paying. In fact, just focusing on securing a good premium rate could come back to haunt you if you do need to make an insurance claim.

If you sign up for a policy with low premiums you may find yourself facing a huge deductible cost after an accident. Or you may find that your insurance simply doesn’t cover the type of damage to your car.

Before you sign up for a policy, make sure you ask exactly what it covers you for and what isn’t covered. That way you can assess if you need any extra coverage.

You can boost your coverage using insurance policy add-ons. These will increase your premiums but they can provide invaluable coverage in areas that you need it most.

3. Financing Your Premium

When signing up for a new insurance policy, it is also worth looking at when you can pay your premiums. Most companies offer options for how often you have to pay your premiums. For example, you could pay your insurance premiums:

  • Once a year
  • Once every six months
  • On a quartley basis
  • On an annual basis

If you pay your premiums on an annual basis you will pay in one lump sum, which doesn’t suit everyone financially. Instead, most people opt to pay monthly or quarterly sums towards their premiums.

However, the monthly cost of premiums can add up to more than an annual payment. So if possible, try to organize making your payments at quarterly or six-month incraments. You’ll have to pay slightly more each time but you’ll save money in the long run.

4. Not Disclosing Any Prior Claims

When an insurance company is calculating a quote for you, they will look at your driving history. This includes any previous claims that you have had to make on your car insurance policies.

If you have made claims in the past, this will usually mean that you have to a higher rate on your premiums. But don’t be tempted to hide any claims from your insurer to keep your premiums low!

If your insurer does find out about previous claims during your policy they could significantly increase the price of your premiums. Or they may decide that your policy is no longer valid based on the information your provided. This could really leave you in hot water if you do have to make a claim!

5. Forgetting to Calculate a Fair IDV

When you sign up for an insurance policy, one of the most important things to provide is the Insured Declared Value (or IDV) of your car. This tells the insurance company how much your car is worth when you take the policy out. This is not based on how much your paid for the car or how much you could sell it for in the future.

Your IDV is calculated based on how much your car has depreciated in value since you bought it. So things like regularly maintenance checks, safe driving, and general care for your car will work in your favor.

This is important as your insurer uses the IDV to insure your car for Total Loss claims (such as theft of your car or irreparable damage).

6. Failing to Ask About Accident Forgiveness

When shopping around for a policy, you should always ask about accident forgiveness. This means that an insurance company will overlook first-time accidents on your policy.

Not all insurance companies will offer this but it can help to protect your no-claims record. So it is a serious bonus if it’s on offer!

7. Ignoring Voluntary Excess Options

When shopping for car insurance, there are two figures that you will be looking out for:

  • The cost of your insurance premiums
  • The cost of your excess or deductibles

Your excess or deductible cost is the price you have to pay on a claim before your insurance company will pay out. For example, let’s say you make a claim for $4,000 worth of damage. If you have a deductible of $500 you will have to pay this before the company pays out on your claim.

Most policies have a fixed excess however you can reduce the cost of your premiums by voluntarily increasing your excess. This could save you a lot on your premiums, especially if you never have to make a claim!

8. Leaving a Big Gap Between Your Insurance Policies

If you are planning to use your car regularly, then you will need continuous insurance coverage. However, it is also in your interest not to leave huge gaps between your policies.

Insurance companies may require a vehicle inspection if your car has not been insured for a while. This is to make sure that your vehicle is still worth what it was when you last insured it.

As a result, you may end up paying more on your insurance premiums to cover the cost of this inspection. So make sure you don’t wait around to renew or sign up for a new car insurance policy!

9. Not Comparing Policies

There are nearly 6,000 insurance companies in the United States. So you should be able to find a policy that works for you and you mustn’t settle for the first policy you find.

Comparing insurance costs will help you to find the best possible deal. To do this, make sure that you are comparing exactly the same coverage and insurance terms and conditions. It is also worth looking at how much each company’s add-ons cost.

When you have found a few companies that you like, do a little more digging into them. Checking out reviews from previous customers can tell you a lot about their customer support and how easy it is to make a claim.

10. Keeping Things Offline

When it comes to finding a great insurance deal you no longer have to stick with local auto insurance companies. Going online will help you to find great insurance deals from national or even global insurance companies.

There are also lots of great websites that let you enter your car’s details and compare insurance coverage deals in one place. So let the internet make finding great auto insurance easier for you than ever before!

Avoid These Auto Insurance Shopping Mistakes Today

When it comes to getting a good deal on your auto insurance, it is important that you take the time to calculate the coverage that you need carefully. Once you know exactly what you need, you can shop around for deals to find the right provider for you. Keep these auto insurance shopping mistakes in mind and you can’t go wrong!

Are you looking for more great car maintenance tips? Then keep scrolling now for more brilliant advice.


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