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Beware of These Car Insurance Pitfalls

Helen Hepburn

Having your own car in the US is rather a necessity than a privilege, especially in the rural areas with no public transportation. Hence, everyone would sooner or later deal with the car insurance matters, which is a mandatory process for the majority of the states. Insuring of your car is in your own interest because the costs for its repairs or replacement in case of any damage or steal are super high.

Before you insure a vehicle in the first insurance company that you come across, let’s dive into the question. Auto insurance in the United States is a complicated procedure since there is no universal system that regulates this industry. Each state sets their own requirements to drivers who want to insure their car.

Nonetheless, when it comes to the insurance policy, all the US states can be divided into 2 categories:

No-Fault States – regardless of whose fault the accident was, if someone caused damage to your vehicle, your insurance company covers it. This type of insurance is common in 12 states – in Florida, New York, Michigan, and others.

At-Fault States – the culprit of the accident takes the responsibility of the accident and pays for the damage. This is a rule for 38 states, including California and Washington.

Okay, based on the state you live, you know exactly what kind of insurance policy you’ll be getting. But how much in average will the insurance cost?

How Much Will It Cost Me?

The most common place where can purchase an insurance is the insurance company or online providers, for instance, Personal Money Service for auto insurance. Or you can buy one from a licensed broker or an insurance agent. Companies are independent in their choices when it comes to pricing and number of offers. The price usually depends on you and your vehicle. The more expensive car you own – the higher cost of repair will be in your insurance package. Young drivers would also need to pay more for their premium than more experienced drivers with a good driving record.

The insurance package lasts from 6 to 12 months. You can either make monthly payments or pay one with a lump sum. If you choose the second option, you can even get a discount. Also, if you choose an annual insurance, the price won’t get higher compared to 6-month insurance when each time you’ll need to pay more.

But even now this isn’t all. Remember about the insurance deductibles or excess? This is a fixed amount that you have to pay the insurance to reimburse you for the car damage. The more you decide to pay for an insurance excess, the less money you’ll spend on damages later. So if your car is always at risk because you park one it outside your office or something else, think twice before opting for the minimum excess. In the end, you are likely to pay much more.

I Got a Rejection from My Insurance Company, Why?

Unfortunately, you cannot 100% rely on your insurance company in case of any matter. If the company did not include the accident in your insurance policy, it can reject your claim. So in the end, you’ll have to deal with the entire bill on your own… even if you purchased the most cost-effective insurance.

So before you shop for any good option, make sure you understand when the company is not going to reimburse you. The rejections are not only based on the coverage aspect. The most common are:

● Drivers that kept doing late payments for the insurance;

● The accident happened while someone else was driving your car (friends or relatives);

● Reckless driving, ignoring traffic rules and speed limit, etc;

● The driver was under the influence of alcohol or drugs;

● The vehicle wasn’t kept in safety and then got stolen;

● Not being honest with your company about any issues;

● Your policy has expired.

As you see, the most important pitfalls when it comes to auto insurance are related to the price and people’s ignorance of the insurance terms. Make sure you are aware of ALL details of the insurance package before you sign the contract with the insurance provider. This way, you’ll know when you can rely on your insurance and when not.

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