Most well-informed car owners are aware that car-related expenses don’t end after purchasing a car. In fact, cars are generally considered a liability because of how rapidly they depreciate in value, along with their maintenance costs and their contingent expenses, such as repair costs.
All of these things add up fairly quickly, and can turn your car into a money pit. While you can’t completely eliminate these costs, there are ways that you can avoid mistakes and minimize your spending. Car insurance mistakes are a prime example of this. Here are some mistakes that you should avoid:
Committing to a Policy Without Comparing Other Quotes
The ironic thing about car insurance is that even though it’s a means to secure your investment, very few people actually take the time to understand how it works. Remember that each insurance provider offers a wide variety of policies that could either be better for you or not. It’s always best to get auto insurance quotes from several providers so that you’re able to compare and select the policy that serves your needs best.
Paying Only Minimum State Insurance
Most people will pay no more than the minimum required amount thinking that they might be saving money now, but the problem is that these policies come bundled with higher premiums. Not only this, but your car may not be fully covered by the insurance policy if you insist on accomplishing only the bare minimums. You could be hurting your finances later on, especially when you find out that your insurance policy does not cover the full value of your car.
Fronting is the fraudulent act of registering a car under a parent’s name, when in truth the car belongs to a teenager in the family. This is an uncommon practice because insurance providers consider teenage drivers to be a greater risk compared to adults and thus, charge higher premiums for cars registered to teenage drivers. While it may initially seem like a smart way to circumvent the system, the truth is that this is not only immoral, it’s also illegal. In fact, insurers are likely to refuse to pay for damage sustained by the vehicle registered via fronting, and they may even charge the policyholder additional expenses accrued from third-party drivers. You may initially save a few hundred dollars, but you run the risk of not getting any support when you need it most.
Finally, you should never allow your insurance coverage to lapse, even for a day, and even when you plan on transferring to a new policy. Even a single day lapse in coverage will be perceived as a major risk factor , which will signal your insurance provider to increase your premium. In worst cases, such a lapse may even disqualify you from applying for an auto insurance policy.
Car insurance should be perceived as an investment rather than a liability. This way, more people are likely to study the nuances involved. Like any investment, nobody wants to be throwing money away on something that may not yield the returns they need. These mistakes are exactly what will hurt your chances of receiving the full benefits of a car insurance policy.