6 Mistakes to Avoid When Shopping for Car Insurance

Photo: The U.S. Army

Shopping around for car insurance can help you find the best possible deal and even help you negotiate for a better rate. You need to do more than just focus on the rates the insurance company has quoted, however. Asking some critical questions and taking a good look at your coverage options will help you find an insurance policy that truly meets your needs — and also helps you avoid some costly mistakes. (See also: How to Get Cheap Auto Insurance for Young Drivers)

Here are six mistakes to avoid when shopping for car insurance.

1. Not Knowing How Much Coverage You Need

If you are changing auto insurance providers, want to add a new vehicle, or are moving out of state and need to purchase insurance, take a good look at the coverage options and your state's minimum requirements. Buying excess coverage is a common mistake — especially if you are a new customer and have been pressured into signing for a policy by an insurance agent. Also consider other types of insurance that might be cheaper. For example, Metromile offers pay-per-mile insurance for those who don't drive often. 

2. Relying Only on Online Shopping Comparison Sites

While most of the major insurance providers are listed on online insurance quote sites, some are not, and these companies might be able to offer a better rate. Make sure you’re aware of all of the insurance agents or companies in your area, so you’re not relying solely on the online shopping comparison sites for the best quote. You just need to set up a phone call with an insurance agent and provide some basic information about your driving history, your vehicle, and insurance needs; and the agent can extend a quote over the phone within minutes. If you submit your information on an online shopping comparison site, you may need to wait a few days for an agent to get back to you, and the “instant quotes” may not be anywhere near what you will end up paying.

3. Forgetting to Factor in a Big Umbrella Policy

If you purchased an umbrella policy in the past, make sure you’re able to purchase the same level of extra coverage with your new insurance provider. An umbrella policy provides extra coverage when your liability coverage ends. If you have a considerable amount of assets and want to avoid a costly lawsuit, make sure you have the option to purchase an umbrella policy. Most insurers will charge extra for this policy, so you’ll need to factor this in when requesting a quote.

4. Not Asking About Discounts

While some discounts are applied automatically, others require a fairly extensive review process to determine eligibility and will require some action on your part. If you’ve taken a remedial driving course, started working from home, or switched employers, make sure your insurance company knows about it. Not all discounts that you are eligible for may be advertised on the company website, and the insurance agent might not even bring them up during your first meeting. Ask about a “good driver” discount, employee discounts, and other incentives that might bring down your insurance rates.

5. Not Reviewing Your Driving Record

If you are planning to switch insurance providers, you’ll need to fill out a formal application and include details about your driving history. Make sure you’re providing accurate information about your driving record, or you could be guilty of insurance fraud. If you can’t recall all of your traffic violations and tickets from the past five years, just get in touch with your state’s department of motor vehicles and request an official copy of your driving record. The DMV will have a long list of all violations and reports on file and can pull the information you need fairly quickly.

6. Ignoring Payment Policies

While most insurance companies offer convenient payment options and even online bill pay, late payment fees and other charges vary from company to company. Don’t forget to ask what the payment policy is, when payments are typically due, and about discounts for paying the entire balance upfront. These small details aren’t always listed on the company’s website and may only be revealed when you see the final contract.

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Guest's picture

My auto insurance company offered a substantial discount for paying the entire premium up front. Factor in the service fee for paying monthly and it totaled almost 10% of the bill in savings. Obviously this is quite a bit more than my savings account is paying so I withdrew the money and paid upfront. Now I have the amount of the monthly bill transferred automatically from checking to savings so I will recieve the extra 10% plus a small amount of interest and I will have the money available to pay the next 6 month renewel when it comes due.