5 mistakes to be wary of while buying auto insurance
While purchasing four-wheeler insurance, in most scenarios, you blindly trust the insurance agent or go for the deal where you need to pay the lowest premium. Due to this, people often opt for a policy that does not suit their requirements. One has to do proper research and be aware of certain red flags while purchasing a policy. Here, we will discuss some common mistakes you must avoid while buying auto insurance.
What is auto insurance and what are frequent mistakes to avoid while purchasing it?
Auto insurance is a legal contract between a car owner and an insurance company stating that the insurer will protect the owner against any financial loss that occurs during an accident or theft. The insurance company guarantees to offer coverage in exchange for monthly premiums. Let’s take a look at some of the frequent mistakes one should be wary of while opting for vehicle insurance.
Lack of knowledge on the type of coverage you need
All types of insurance have minimum coverage requirements. However, while buying auto insurance, you should not base your decision on just that. Each car owner has their conditions and preferences; it depends on various factors like
- The vehicle type and model
- Price of the vehicle
- Weather conditions of the area
- Driving conditions in the locality
- The driving experience of the vehicle owner
- Approximate distance that you drive
Full coverage can be really expensive, so one must find the perfect balance between cost and coverage.
Not comparing auto insurance policies
A common mistake every car owner commits is not comparing the insurance policies online. Not comparing insurance quotes, benefits, and coverage will result in inadequate coverage, and the owner will end up not getting the best deal. Usually, purchasing an auto insurance policy with a lower premium alone won’t give you sufficient coverage. Therefore, you must compare car insurance policies, inclusions, and benefits and then single out the best insurance that suits your needs to benefit your buck.
Providing incorrect details
When buying a car insurance policy, people must share the correct information about themselves and their vehicle. You should answer all the queries of the insurance company accurately and truthfully. When people hide important details about an event or their age or driving history, they may face rejection from insurance companies. In severe cases, the person may even have to face legal complications.
Choosing incorrect deductible amount
Apart from the insurance coverage and monthly insurance premiums, you must also be aware of the deductible amount. Generally, a lower deductible means a person has to pay higher insurance premiums but less out of their savings if they got involved in an accident. A higher deductible amount, on the other hand, will save you some money on your insurance premiums, but you might need to break your piggy banks if and when you are involved in an accident.
Not considering the No Claim Bonus Component
To lower your monthly insurance premiums, you must accurately maintain your No Claim Bonus (NCB) component. This renewal discount is exclusively offered to those policyholders who haven’t made any claim with their insurance policy during the policy period. If you do not raise the claim for five years, you can avail of a discount of about 50% of the Own-damage component of the policy. So if you are considering raising a minor claim, you must base that decision on the accumulated NCB amount.
Big gap between policy renewal
Most insurance companies let their policyholders know their upcoming renewal date approximately four months in advance. Renewing your insurance policy before the expiry date is crucial since if the authorities catch you without valid insurance, you might face legal action. However, if you cannot renew your insurance before the expiry date, ensure that the gap between the expiry date and renewal is as small as possible. If there is a huge gap, it will have a significant impact on your insurance premium.
With that being said, while purchasing auto Insurance, one must go through the terms and conditions carefully and ask as many questions to the insurance company as necessary. Only after doing so, one can safely proceed to buying any insurance policy.
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