Auto insurance may seem simple, and it doesn't have to be hard to buy, but there are things you need to know that you may not be aware of. A small mistake could cost you thousands in extra premiums or not having coverage for an accident. Here's what you should avoid.
Not Checking Quotes
If you've always had one auto insurance company that was cheaper than others, you might eventually stop shopping around and always stick to them when it's time to renew your policy. To understand why this is a bad idea, you need to understand how auto insurance companies set their prices.
Every insurance company considers things like accidents and speeding tickets, but their formulas are all different. One insurance company might have a bigger increase for getting into an accident but forget about the accident sooner. So the insurance company that was cheapest for the first three years after your accident might be the most expensive in the fourth year.
Not Keeping Track of Your Credit Score
This will vary by state because some states don't allow car insurance companies to use credit scores, but your credit score can make a big difference in your car insurance rate if you're in one of the states where it is allowed. Car insurance companies use credit scores because their data shows that a low credit score means you have a higher chance of filing a claim instead of paying for a small claim yourself.
Your credit score is something you normally build over time, but temporary changes can leave you paying a lot more for auto insurance. For example, you might max out your credit card on vacation, intending to pay it off by the due date. If your car insurance renews while the credit card is still maxed out, you could see a rate hike.
Not Telling the Insurance Company You Bought a New Car
Car insurance goes by the car and not the person. If you get a new car, it's going to be worth more and have different safety features, so the insurance company will charge a different rate.
It's easy to forget to change your car insurance while you're doing all of the other paperwork to buy a new car. However, if you don't put the new car on your insurance, it's the same as if you didn't have any insurance on that car at all.
To make sure you have the auto insurance you need, contact a local auto insurance company today.