You’ve been a good and responsible driver for as long as you can remember. Extremely cautious and conscientious, plus adequately defensive when the need arises.
You’ve also faithfully paid for your auto insurance as required by law, never once letting the policy period lapse.
As far as you’re concerned, you’re fully protected. Driving around cannot possibly be any safer than this, right?
But since accidents are called so because they are mostly never intended, your car is ultimately involved in one.
The vehicle directly ahead of you suddenly stops as you approach an intersection. Then despite your best efforts to hit the brakes, you end up rear-ending it pretty badly.
The damage looks pretty extensive and costly. But since you devotedly cater for the insurance bill, you’re not worried at all. Your insurer will take care of it all.
Then your dominoes start falling immediately you initiate the claim process. First, your insurer proves to be quite slow in responding. But you’re still patient and very optimistic.
Ultimately, the insurer is kind enough to reach a verdict on your application. But unfortunately, it’s all bad news.
Your claim is rejected on a minor technicality that you had previously overlooked. Like a model recall over an accelerator problem that you had adhered to, but failed to update your insurer.
And just when you think it can’t get any worse, you realize that your premiums will be revised upwards.
Essentially, you’ve pretty much paid thousands of dollars’ worth of insurance, but all for nothing. Funds that would otherwise buy you a spanking new car.
The only consolation would be the fact that there are many other car owners in a similar situation.
A study by J.D Power surveyed 11,857 auto insurance customers who recently filed claims across different states. The subsequent customer satisfaction rate ranged between 78.7% and 89.1% among leading companies.
That leaves out a substantial amount of customers who feel that they’d have been better off with other insurance providers.
Auto insurance claimant satisfaction rates. Source: JDPower
Now, of course, we recognize that some claims are rejected due to evidence of fraud. The rest?
Well, the bulk of them are attributed to avoidable mistakes drivers may have committed during the course of their auto insurance coverage.
And that’s just a fraction of affected individuals. As a matter of fact, these errors are even commonamong drivers whose claims successfully sail through.
For instance, many continue to overpay for insurance they don’t even need in the first place.
As an expense that is ranked third highest of owning a car, there is simply no room to make errors with your auto insurance. To help you avoid them, here are some of the most common ones:
1. Selecting Auto Insurance Company by Cost Alone
Most of the ads ran by auto insurance companies focus only on price. And of course, it all makes sense. Auto premiums are already too costly in the U.S, running into hundreds of dollars every year. So who would want to overpay for insurance?
To make matters worse, the rates are still appreciating. All factors considered, isn’t cheap insurance the best thing for car owners?
Average car insurance appreciation rates. Source: WallStreetJournal
It’s critically important to review insurance costs when selecting a company and its corresponding coverage. But that’s just a single element.
The most important thing should be the insurance coverage itself.
What does the cheap insurance come with? Does cost correspond to the coverage? Or is the insurance company attempting to dupe you by offering reduced rates for an extremely limited coverage?
2. Sticking To Legal Minimum
Auto insurance is a compulsory requirement according to state and federal laws. But, there’s still a substantial group of drivers moving around with uninsured vehicles. Michigan ranks number 4 with an average rate of 20.3%.
Uninsured drivers. Source: CarInsurance
Then there’s another increasingly larger group that only purchases insurance to be on the right side of the law. So they only stick to the legal minimum as stipulated by state legislation.
The thing with the legal minimum is that it’s just that. Nothing more than a coverage that you can get away with when cops flag you down.
In Michigan, for example, the minimum coverage is $20,000 per individual, and $40,000 per incident for injuries. Since property damage is costlier, the minimum coverage every driver is required to carry is $1000,000.
Let’s look at it from a different perspective. In case of a severe accident, the legal minimum would do little to bail you out of consequent liabilities.
So, while it might cost you more, it’s advisable to purchase insurance in line with your precise risk factors.
3. Not Fully Comprehending The Insurance Coverage
Some expressions like “comprehensive coverage” are thrown around quite a bit in the auto insurance industry. Even when they are not applicable.
Additionally, marketing teams are consistently capitalizing on attractive terms, which may be misleading when compared to their corresponding policies. Then just when you get the chance to set records straight during application, you end up ignoring the fine print in the policy document.
Interestingly, 81% of consumers are fairly confident that they know their auto insurance basics. However, and rather surprisingly, 99% of them couldn’t accurately define 10 terms commonly used by insurance companies.
Okay, we know that watching paint dry could possibly be more interesting than reading a policy document word for word. Plus insurance can be complicated even for drivers who directly work in the industry.
But, fully comprehending insurance coverage could save you a lot of problems and money. So seek additional information from your insurer on unclear issues. Alternatively, talk to your independent insurance agent to clarify and advise on all the critical aspects.
4. Not Keeping Up To Date With Discounts
It’s common knowledge that the auto insurance world is laden with numerous discounts and offers for consumers. Thanks to the progressively intense competition between insurance companies.
By now, there are discounts for almost anything. From the number of cars to your kids’ genders. Pretty exciting. But, strangely, many drivers are still yet to capitalize on this competitive environment.
Staying up to date with news on recent price cuts is at the bottom of their priority list.
Even when an overwhelming majority of the discounts don’t apply to your case, you’re bound to find some that you perfectly qualify for.
And that alone could save you hundreds, if not thousands of dollars every year.
So stay on the lookout for any attractive offers not only from your insurer, but also other companies.
5. Shopping For Insurance Without Adequate Self-Assessment
I know. We’ve previously mentioned how important it is to align insurance coverage with your precise risk factors.
But what does that mean in the first place?
Determining all the risks might seem like a pretty cumbersome process. Because, who has time to calculate the number of average miles travelled per year?
Or the number of accidents linked to a specific vehicle make?
As a result, many consumers skip this stage and proceed to purchase insurance blindly.
Self-assessment, however, is not that complicated. It only involves keenly evaluating specific factors that are relevant to insurance companies.
The number of drivers, for example, would be a good place to start. Along with age and type of vehicle.
This should help you identify insurance companies and subsequent coverage tailored to your specific needs.
The Wall Street Journal advises drives to comprehensively calculate the value of their assets, compare possible deductibles, understand state regulations applicable to them, plus consider possible insurance covers that go hand-in-hand with respective policies.
6. Failing To Notify Insurer Immediately After Accident
A car accident can be pretty frightening and disorienting even for seasoned drivers. It might take time to come to terms with the situation, and recollect your thoughts.
That’s why getting in touch with relevant insurance companies could be the last thing on your mind.
And just like many other drivers, you may choose to postpone the whole process to a “more convenient” time.
While accidents can be traumatizing, another sure fact is that insurance companies are in business. If they had a choice, they would rather hold on to their cash and reject all claims.
And with 30% of insurers claiming that they are not adequately prepared against fraud, companies are now alert more than ever before.
Only 7.4% of auto insurance claims are flagged as potential frauds within the first 125 days. Then the percentage keeps rising steadily with every new day.
It would be in your best interests to contact your insurance company immediately after an accident. The earlier the report, the easier it is to investigate and prove circumstances surrounding the accident.
Some companies even have strict guidelines on acceptable time frames for reporting an accident. Late reports, therefore, could mean automatic claim rejection even when they are genuine.
7. Prematurely Cancelling Previous Coverage When Switching Insurers
If you’re conscious about offers by different insurers, you’ll ultimately land a much favorable deal. Better than what your current insurer can offer.
Now that’s a good position for any policyholder. Unfortunately, it introduces a dilemma. Should you go ahead and cancel your current cover before switching providers?
It’s normal to be excited about switching insurance providers. But don’t let this cloud your judgment, then end up cancelling your current insurance coverage.
This mistake alone can cost you quite a lot of money, and disqualify you for discounts. Without an existing cover, the insurance provider you’re shifting to will consider you as a high-risk consumer.
Even a day after cancelling your previous coverage could result in substantially spiked premiums. Consequently beating the whole purpose of shifting camp.
The best way to manage this is maintaining a continuous coverage. Hold your horses until you successfully obtain a new policy before you finally cancel the old one.
8. Automatically Renewing Current Policy
On the flip side, if you’re not that keen on new offers, you may end up sticking with your current insurer for quite some time.
This is quite prevalent among individuals who are too busy to shop for alternative covers. And that, of course, translates to cycles of automatic policy renewal.
At first, it may not seem like such a bad idea. After all, aren’t loyal customers rewarded with cheaper rates?
A study by J.D Powers, however, suggests otherwise. Staying in your coverage comfort zone can cost you up to $300 with each renewal.
It’s rather interesting that old policies continue to attract the biggest premium increases.
Basically, the longer you stay with your insurance company, the more you stand to lose. And the vice versa is true.
Therefore, prepare to pack up your bags and leave before the next scheduled renewal period.
9. Not Engaging an Independent Insurance Agency
We’ve covered quite a number of common mistakes. But one pretty much sums them up- failing to engage an independent insurance agency.
Independent agents, unlike their captive counterparts, work for you. They don’t look out for insurers’ interests.
So their core job is to help you avoid all these mistakes.
In addition to providing critical advice on auto insurance, they interpret insurance policies, engage multiple providers to secure the best possible rates, facilitate application and shifting, plus offer much needed professional guidance when filing for claims.
If you’re engaging a reputable firm like Signature Insurance, you can rest assured that you’re not a victim of any of these mistakes.
● The customer satisfaction rate ranges between 78.7% and 89.1% among leading insurance companies.
● As an expense that is ranked third highest of owning a car, there is simply no room to make errors with your auto insurance.
● It’s critically important to review insurance costs when selecting a company and its corresponding coverage. But the most important thing should be the insurance coverage itself.
● 81% of consumers are fairly confident that they know their auto insurance basics. However, and rather surprisingly, 99% of them couldn’t accurately define 10 terms commonly used by insurance companies.
● Even when an overwhelming majority of the discounts don’t apply to your case, you’re bound to find some that you perfectly qualify for.
● Self-assessment only involves keenly evaluating specific factors that are relevant to insurance companies.
● It would be in your best interests to contact your insurance company immediately after an accident. The earlier the report, the easier it is to investigate and prove circumstances surrounding the accident.
● Without an existing cover, the insurance provider you’re shifting to will consider you as a high-risk consumer.
● Basically, the longer you stay with your insurance company, the more you stand to lose. And the vice versa is true.
● Independent insurance agents’ principal job is to help you avoid all these mistakes. In addition to providing critical advice on auto insurance, they interpret insurance policies, engage multiple providers to secure the best possible rates, facilitate application and shifting, plus offer much needed professional guidance when filing for claims.
Which other mistakes do you think are quite prevalent among auto insurance policyholders? Feel free to share with us.