Common Mistakes to Avoid While Purchasing Car Insurance

No matter which product or thing we buy, we put plenty of thought and research into it. Unfortunately, this is not the case when it comes to buying car insurance. Most of us purchase it blindly because of legal requirement or we have been sold to by the insurance salesperson. One of the prime reasons for it is the lack of understanding of insurance jargon in the car insurance policy.

However, you realize your mistake only at the time of making a car insurance claim. Most of us purchase just basic mandatory insurance and have to pay for costly car repairs at times of disasters. To avoid such disastrous circumstances, we highlight a few common blunders that one must become aware of and avoid while purchasing car insurance.

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  • Looking for the minimum premium amount

Very few pay importance to a car insurance policy that it deserves. Most view it as a necessary expenditure to meet the legal requirement. Thus, they tend to blindly purchase the one with the minimum premium amount.  But such a policy may not be reliable enough to sustain. You would not get an adequate claim amount at the time of need. Moreover, the policy may not offer the benefits that you need. It is important to look into the benefits offered and what the policy covers.

  • Not doing ample research

As already stated, most of the people look at car insurance as a mandatory nuisance. Thus, they purchase whatever is sold to them without comparing various other options available in the market. One must always compare the benefits offered and the prices of Various Car Insurance policies available. Simultaneously, it is always advisable to look into the reputation, brand value and claim settlement ratio of the company whose policy you are purchasing. This will save plenty of hassles in the future.

  • Giving precedence to smaller deductibles

We often fall prey to it because of our calculative nature. Moreover, there is a misconception that a low deductible amount proves more profitable. But it is not so. Foremost, one must realize that the deductible is the percentage of the total car repair cost that a policyholder needs to pay any time a claim is made. With this in mind, people opt for a lower deductible. But a lower deductible means a higher premium. It is smarter to choose a policy with a higher deductible with a No Claim Bonus option. NCB is the amount that the insurance company pays you if you do not file any claim for the given policy tenure.

  • Hiding details about the driver and history

Most of us tend to skip on important information like the age of the person who would be predominantly driving the car, his/her driving history, usage pattern of the car, safety accessories installed, etc. Not many are aware but these are important considerations that can help you procure a lower premium amount. Moreover, there is a risk of your policy getting cancelled if the insurance company finds out that you have hidden crucial facts. It is important to maintain complete transparency at every level.

  • Signing without reading the policy

When we are handed over the policy paper, we tend to sign it without reading it. But it can prove to a fatal error. There are various inclusions, exclusions and conditions printed in the policy papers. It is imperative that you read through the fine print of the policy paper and understand it well before putting your signature on it. This would help prevent any rude shock in the future.

  • Cancelling existing policy before purchasing a new one

It is possible that you are not happy with your current insurance company and want to switch over to a different company. You can do so but it is always preferable to port your policy. Even if you wish to cancel the old one and take an absolutely new one, you must always buy a new one while your old policy is in force. This would not only keep you safe against any unexpected circumstances but would also keep your new premium amount in check. A person without any existing policy is always charged a higher premium.

  • Not availing the E-insurance option

Habituated to traditional offline insurance policies; we barely think of purchasing insurance online. But online policies prove far cheaper than traditional offline policies as you are saving on the cost of an agent who is working on a commission basis.

Wrapping up

By now, we hope that you are aware of trivial mistakes that anybody can make. Unfortunately, the price of these mistakes is high. Being trifle alert and making a smart choice of your car insurance policy will help you reap its benefits in the true sense.



David Rosenberg: A seasoned political journalist, David's blog posts provide insightful commentary on national politics and policy. His extensive knowledge and unbiased reporting make him a valuable contributor to any news outlet.