7 Common Mistakes to Avoid When Shopping for Low Cost Auto Insurance

Low cost auto insurance is not oxymoronic; it’s possible to buy quality insurance at a reasonable price, and still get good service. The trick is to avoid common mistakes when shopping for your car insurance.

1. Understand that the insurance agent is not your buddy.
He is a salesman, and if he is paid on commission, it’s in his and his company’s best interests (not necessarily yours), to encourage you to buy coverage that you may not need. If he’s not on commission, he may actually discourage you from buying insurance that you might otherwise need, because smaller policies mean less exposure to the insurance company, and proportionately, less risk.

2. Get a copy of your driving record; it is not always correct.
If you’ve gotten a ticket for which your penalty was traffic school, your participation may not be reflected. To that end, keep all receipts for paid tickets and traffic school until your license renews.

3. Understand that your deductible and your premiums are inversely related.
By keeping a higher deductible, your premiums are lower, and you can use the difference between a low premium and the higher premium, and stash it away, in the event you might need it some day for your deductible. While you might be tempted to keep a low deductible so that you can file a claim for fender benders, each and every claim raises the likelihood that your future premiums will increase.

4. Be honest about your driving history.
The insurance companies can and do verify this with the state department of motor vehicles; if you omit something, they can deny your application or reclassify you as a high risk applicant.

5. Don’t buy the same coverage for different cars.
An older car may not need collision or comprehensive coverage; the rule of thumb is if the value of your car is less than ten times the premium cost, it’s not worth the price of the policy. Also, collectible cars will likely require a specialized policy, such as classic car insurance.

6. Don’t assume the state’s minimum requirement is sufficient.
If you get into an accident that surpasses the limitation, it has to be paid somehow, and that will be through you or your assets. Consider how much damage your car could cause, if an accident occurred; typically, the bigger the car, the more significant the damage potential. Likewise, because of the skyrocketing costs of medical procedures, even a short stay in the hospital could wipe out your entire limitation; many experts suggest having at least $500,000 of liability coverage.

7. Consider opening an umbrella. Policy, that is.
An umbrella policy is relatively inexpensive, and can protect you and your assets in the event of a “catastrophic” accident, that goes way beyond your coverage limitations.

When you’re ready to buy your car insurance, keep these in mind, and you’ll be on your way to getting the affordable car insurance with all the coverage you need.