Beware These 7 Common Car Insurance Shopping Mistakes

Shopping for car insurance can be tedious and tiresome. But cutting corners with this process can mean wasting money at best, and risking your savings at worst.

With a financial product as expensive yet indispensable as auto insurance, even a small misstep can lead to a fall.

The following insurance-buying mistakes can easily cost you hundreds of dollars a year — and potentially shave tens of thousands of dollars off your net worth.

1. Failing to shop around

To recognize a good deal on car insurance, you must shop around. Policy pricing can vary widely from one insurer to another. You stand to save hundreds of dollars a year or more simply by comparing prices.

Consider quotes from several companies so you don’t limit your options.

If that sounds like too much hassle, let a third party such as Gabi or The Zebra do it for you. These companies specialize in streamlining the car insurance shopping process.

Money Talks News founder Stacy Johnson details his own experience using Gabi in “How I Found $546 in Car Insurance Savings in Under 10 Minutes.”

2. Deciding based on price alone

Basing an auto insurance decision on price alone can be a costly mistake.

Saving hundreds of dollars a year in premiums won’t matter if you’re responsible for a car accident and discover afterward that you have inadequate protection. Such a poor decision could leave you on the hook for thousands of dollars.

If you find an inexpensive policy, make sure it has all the protection and features you need. Stacy explains how to do this step by step in “How to Get the Best Possible Deal on Car Insurance.”

3. Buying the minimum coverage required by state law

The minimum amount of coverage that your state requires is just that — a minimum. It can be woefully insufficient.

For example, take liability coverage, which pays for damage that you cause to other people or their property. Stacy has described it as “one area of your car policy where you don’t want to scrimp.”

If a court rules that you’re responsible for an accident involving serious injuries or significant property damage, the minimum amount of liability coverage probably won’t be enough to protect financial assets like your savings. You could end up paying tens of thousands of dollars from your own pocket after your policy pays out.

4. Not checking for complaints against insurers

Before you buy a policy, check with your state department of insurance to find out if there are complaints against an insurer you’re considering.

Ask about enforcement actions, and find out if your state publishes complaint ratio reports. These reports tell you whether an insurer receives more consumer complaints than average.

You can also search for complaints against insurers through the National Association of Insurance Commissioners website.

5. Not making side-by-side comparisons

Once you narrow choices to a few policies, compare them closely to be sure the one you choose has the right coverage.

For example, you may want uninsured motorist coverage, which helps pay for accidents caused by uninsured drivers. You also may want comprehensive and collision coverage, which pays for damages that you cause to your own car, and pays if your car is stolen or vandalized.

6. Buying more coverage than you need

Just as you can buy too little coverage, it’s possible to buy too much. Excess coverage is a waste of money.

If you have few assets, you probably don’t need as high of a liability limit as someone with a lot to lose. If your car wouldn’t be expensive to replace, you might be able to get by with less collision or comprehensive coverage, or drop that coverage entirely.

Beware of unnecessary policy add-ons as well. If you already belong to an auto club that provides roadside assistance, you don’t need a policy that offers the same service.

7. Sticking with the same insurer year after year

Car insurance is highly competitive. It’s possible to reduce costs by hundreds of dollars a year by simply switching to another carrier.

When your next bill arrives, note the coverages you have and seek quotes from other insurers to find out if you would save by switching.

You can do this by contacting insurance agents directly, filling out forms on insurers’ websites, or letting a service like Gabi or The Zebra get the quotes for you.

If you find a better deal but want to keep your present carrier, tell your agent. Your insurer might match or beat the other company’s offer.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
5 Reasons You Should Work for as Long as You Live
5 Reasons You Should Work for as Long as You Live

These benefits might make you think twice about retirement.

New Ways to Save Money on Insurance of Every Kind
New Ways to Save Money on Insurance of Every Kind

Tech startups are making it easy to find the best rates for all kinds of insurance policies.

12 Expenses You May Be Tempted to Claim as Tax Deductions — but Shouldn’t
12 Expenses You May Be Tempted to Claim as Tax Deductions — but Shouldn’t

Thinking of trying to deduct a few of these things on your federal tax return? That could be a costly mistake.

3 Reasons You Can’t Rely on Medicare Alone
3 Reasons You Can’t Rely on Medicare Alone

Counting on Medicare to cover health care costs can jeopardize your retirement plans.

How to Achieve Your Financial Goals in 2020
How to Achieve Your Financial Goals in 2020

New year, new you. Get your finances on track with the help of these tools for investing, saving, budgeting and earning.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
10 Things Frugal People Never Buy
10 Things Frugal People Never Buy

If you’re a true tightwad, the mere thought of spending money on these items gives you the willies.

10 Useless Purchases You Need to Stop Making
10 Useless Purchases You Need to Stop Making

You might as well flush your money down the loo if you spend it on these things.

The 16 Cars Most Likely to Last 200,000 Miles
The 16 Cars Most Likely to Last 200,000 Miles

One automaker takes half the spots on a list of the longest-lasting vehicles.

7 Social Security Rules Everyone Should Know by Now
7 Social Security Rules Everyone Should Know by Now

Confusion over Social Security is a shame, considering how many of us will need this money badly.

9 Shopping Mistakes to Avoid at Costco
9 Shopping Mistakes to Avoid at Costco

Are you missing out on serious savings at your favorite warehouse club?

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

They don’t make coffee makers like this anymore.

11 Products Now in Short Supply Due to the Pandemic
11 Products Now in Short Supply Due to the Pandemic

Many goods we take for granted have become tough to find in 2021.

7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

14 Things You Should Stop Buying in 2021
14 Things You Should Stop Buying in 2021

These convenient household products come with hidden costs that you might not have considered.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

Is Writing a Check Still Safe?
Is Writing a Check Still Safe?

Every time you pay by check, you hand your bank account numbers to a stranger.

6 Ways to Protect Your Retirement Accounts From Hackers
6 Ways to Protect Your Retirement Accounts From Hackers

Imagine having $245,000 stolen from your retirement account — and not being reimbursed.

8 Things You Should Replace to Improve Your Life Today
8 Things You Should Replace to Improve Your Life Today

Being frugal isn’t smart if you put off replacing these items.

This Is the Most Dependable Car Brand in the U.S.
This Is the Most Dependable Car Brand in the U.S.

This brand’s vehicles are least likely to give drivers repair headaches, according to J.D. Power.

13 Amazon Purchases We Are Loving Right Now
13 Amazon Purchases We Are Loving Right Now

These practical products make everyday life a little easier.

7 Hidden Sections of Amazon Every Shopper Should Know
7 Hidden Sections of Amazon Every Shopper Should Know

These little-known departments of Amazon are gold mines for deal-seekers and impulse shoppers alike.

7 Income Tax Breaks That Retirees Often Overlook
7 Income Tax Breaks That Retirees Often Overlook

Did you realize all these tax credits and deductions exist — or that they apply to retirees?

7 Social Security Benefits You May Be Overlooking
7 Social Security Benefits You May Be Overlooking

There’s more to Social Security than retirement benefits.

The 6 Best Investing Apps for Beginners
The 6 Best Investing Apps for Beginners

If you’re looking to ease into investing in the coronavirus economy with just a little money, check out these easy-to-use tools.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.