Buying car insurance can feel overwhelming. There are so many options, so many terms, and every company seems to offer slightly different coverage. Even experienced drivers make mistakes, and the results can be costly. But avoiding these common errors can save money, stress, and frustration down the road.
Let’s walk through the most frequent mistakes drivers make when choosing coverage — and how to avoid them.
It’s tempting to pick the cheapest policy. After all, who wants to pay more than necessary? But low cost alone doesn’t equal value.
Example: You choose a policy with a super-low premium but minimal coverage. A minor accident leaves you paying out-of-pocket for repairs and medical bills. The “savings” disappear instantly.
Instead, focus on value, not just price. Make sure the coverage matches your car, driving habits, and risk exposure. Price matters, but only after you’re properly covered.
Policy limits define the maximum your insurer will pay in case of a claim. Many drivers pick default limits without checking if they’re sufficient.
Example: Liability limit is $25,000 per person. Your car accident causes $30,000 in medical bills for the other driver. You’re responsible for the extra $5,000.
Tip: Review limits carefully and adjust based on realistic potential costs in your area. Bigger medical or repair costs may require higher coverage.
Optional coverage like collision, comprehensive, UM/UIM, or gap insurance is often skipped to save money. But skipping the wrong coverage can be expensive.
Example: You have an older car and drop collision coverage. Then a deer hits your car. Repairs cost $2,500. Without collision, you pay it all yourself.
Evaluate each optional coverage honestly. Some may be unnecessary, but others — especially gap or UM/UIM — can prevent serious financial loss.
Each state has minimum insurance requirements. Some drivers assume “liability only” is enough everywhere.
Example: In Michigan, you’re required to carry personal injury protection (PIP). If you don’t, you could face fines, penalties, or even license suspension.
Always check your state’s minimum coverage and make sure your policy complies. Meeting the law is the bare minimum; your needs may require more.
Some people assume coverage works in every situation, or they misread policy language.
Example: “Collision covers everything” — not true. Collision protects your car in accidents with other vehicles or objects, but not theft, fire, or weather damage. That’s what comprehensive is for.
Take time to read your policy carefully. Ask questions if something isn’t clear. Understanding what is and isn’t covered prevents nasty surprises.
Life changes: you move, buy a new car, add a teen driver, or change jobs. Your insurance needs change too.
Example: You keep an old policy designed for a different car. New car value, coverage needs, and risk factors aren’t reflected. You’re either overpaying or underinsured.
Review your policy at least once a year. Update coverage, limits, and deductibles to match your current situation.
Many drivers miss out on easy savings. Safe driver discounts, multi-car discounts, bundling auto and home policies, low-mileage discounts, and good student discounts are often overlooked.
Example: John has two cars and a home policy with one company. He never asked about bundling. He could have saved 15% on each policy — hundreds per year.
Always ask your insurer which discounts you qualify for. You might be surprised how much you can save.
Deductibles affect your premium directly. Many people pick a low deductible to “avoid out-of-pocket costs,” but this raises the monthly premium significantly. Others pick a very high deductible without considering if they could afford it in an accident.
Tip: Balance premium savings and potential out-of-pocket costs. Make sure you could comfortably pay the deductible if needed.
Some drivers assume they’re covered for every scenario. Not true.
Example: You think rental car coverage comes with every policy, but it often doesn’t. You may need an add-on.
Example: You assume roadside assistance is included, but many policies require a separate rider.
Double-check what’s included and add coverage only when necessary.
Even if you like your current company, rates vary. Not shopping around regularly can mean paying too much.
Tip: Get at least three quotes each year, check for new discounts, and see if switching saves money. Coverage can be similar but premiums different by hundreds per year.
Choosing insurance isn’t just checking boxes. It’s about understanding what you need, what you’re covered for, and what could go wrong. Avoiding common mistakes saves money, stress, and potential financial disaster.
Insurance can feel overwhelming, but a little time spent reviewing policies, understanding terms, and asking questions pays off big. Think of it as protecting not just your car, but your wallet, health, and peace of mind.
The smartest drivers aren’t just careful behind the wheel — they’re smart about their coverage too. Don’t make avoidable mistakes — be informed, proactive, and intentional when choosing your insurance.