Top 5 Mistakes People Make When Buying Car Insurance
Picture this: you’re at the dealership, keys to your brand-new car in hand, feeling like a million bucks. Then reality hits—you need car insurance. And not just any insurance—the right insurance.
Sounds easy, right?
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Not so fast.
Way too many people rush through buying car insurance, and it ends up costing them more than they realize. In fact, a 2023 survey by the Insurance Information Institute (III) found that 30% of American drivers didn’t fully understand the coverage they bought.
That’s one in three people driving around, hoping for the best.
But you? You’re smarter than that. Let’s dive into the top five mistakes people make when buying car insurance—so you can avoid every single one of them.
1. Focusing Only on the Cheapest Premium
We get it. Car insurance isn’t exactly something people want to spend money on. So when you see a premium that’s lower than your Netflix subscription, it’s tempting to say, “Sign me up!”
But cheap isn’t always smart.
The truth is, low premiums often mean higher deductibles, minimal coverage, or exclusions that can hurt you when you actually need to file a claim.
Here’s a real-world example:
According to a 2022 report from the National Association of Insurance Commissioners (NAIC), policyholders with the lowest-tier insurance were 40% more likely to pay out-of-pocket costs they couldn’t afford after an accident.
Smart move:
Balance price with protection. Make sure your policy covers more than just state minimums. Always read the fine print—better yet, ask questions.
2. Skipping Uninsured/Underinsured Motorist Coverage
“Oh, I’m a good driver, I don’t need that extra coverage.” Wrong. In 2021, the Insurance Research Council (IRC) reported that one in eight drivers in the United States was uninsured. In states like Mississippi, that number skyrockets to almost 30%! Imagine you get hit by someone who doesn’t have insurance—or doesn’t have enough insurance. Without uninsured/underinsured motorist coverage, you’re left holding the bag.
Real talk:
Protect yourself, not just your car. Uninsured motorist coverage can mean the difference between walking away with a full bank account—or facing thousands of dollars in medical bills.
3. Not Shopping Around
Would you buy the first house you looked at? Pick the first cellphone plan you found? Then why on earth would you buy the first insurance quote you see?
Comparison shopping saves money.
A 2023 Consumer Reports study found that shoppers who compared at least three quotes saved an average of $356 per year on their auto insurance.
Pro Tip:
Use comparison tools like:
- The Zebra
- Policygenius
- NerdWallet
- Compare.com
Better yet, call an independent insurance agent. They work with multiple insurers and can often find you a better deal than going direct.
4. Underestimating How Life Changes Affect Insurance Needs
Life happens fast. You move, you get married, you change jobs—you might even add a teen driver to your policy (hello, skyrocketing premiums). Each of these life events can and should impact your insurance needs.
Important data:
According to a 2022 report from ValuePenguin, married drivers pay 16% less on car insurance on average compared to single drivers. Meanwhile, adding a teenage driver can increase rates by 130% or more!
So:
- Got married? Tell your insurer.
- Bought a house? Bundle it.
- Added a new driver? Update your policy (and shop around).
Life changes = insurance changes. Don’t forget to update.
5. Ignoring Discounts and Loyalty Programs
If you’re not asking for discounts, you’re basically leaving free money on the table. And trust me, insurers aren’t going to volunteer that info out of the goodness of their hearts.
Discounts you might be missing:
- Safe driver discounts
- Bundling home and auto policies
- Good student discounts (for your kids)
- Pay-in-full discounts
- Telematics device savings (like Progressive’s Snapshot)
Fact:
A 2022 J.D. Power study revealed that drivers who actively sought discounts reduced their premiums by an average of 15–25%.
Moral of the story?
Ask, ask, and ask again about discounts.
Conclusion: Buying Car Insurance Smartly Pays Off
When it comes to buying car insurance, a little effort upfront can save you thousands later. Avoid the trap of rushing into the cheapest option. Don’t skip critical coverages. Shop around. Update your policy when life changes. And always, always ask about discounts. Because the goal isn’t just to drive legally—it’s to drive smart.
Ready to level up your car insurance game?
Take 30 minutes today to review your current policy. It could be the best financial move you make all year.
Avoid These Mistakes — And Here's What to Do Instead
Now that we’ve tackled the top five mistakes, let’s flip the script.You’re not here just to avoid mistakes—you want to win at car insurance. So here’s what you should actively do when buying car insurance:
1. Understand Your Coverage Levels—Don’t Just Guess
Liability, comprehensive, collision, uninsured motorist—sound like a foreign language? You’re not alone. In a 2023 study by Forbes Advisor, 44% of drivers admitted they didn’t fully understand the terms of their car insurance. That’s almost half the people on the road!
Quick crash course:
- Liability: Covers the other person's car and injuries if you're at fault.
- Collision: Covers damage to your car from an accident, no matter who’s at fault.
- Comprehensive: Covers non-collision damage like theft, hail, or fire.
- Uninsured/Underinsured Motorist: Covers you if the other driver has little or no insurance.
👉 Pro Tip: Always ask your insurance agent to break down each section of your policy. Make sure you know what’s protected—and what’s not.
2. Check the Financial Strength of the Insurance Company
Imagine filing a $15,000 claim... only to find out your insurer is going bankrupt. Sounds like a nightmare, right? It happens. Always check an insurance company's financial rating before you sign anything. You can check through agencies like:
- AM Best
- Moody’s
- Standard & Poor’s
- Fitch Ratings
Fun Fact:
AM Best rates most large American insurers as “A” (excellent) or better, but some small or regional providers can dip into “B” or lower—which means higher risk for you.
3. Pay Attention to Customer Service Ratings
When everything’s fine, customer service doesn’t seem like a big deal. But after a crash, when you're stressed, hurt, or stranded, fast, compassionate service matters more than ever.
Fact:
In J.D. Power’s 2023 Auto Insurance Study, companies with top customer satisfaction ratings were:
- Amica Mutual
- State Farm
- GEICO (depending on region)
On the flip side, insurers with poor service often lose clients—fast. Always check online reviews, BBB ratings, and J.D. Power scores before committing.
4. Understand How Your Deductible Affects Your Premium
Here’s a simple rule:
Higher deductible = lower premium. Lower deductible = higher premium.
But be careful. If you choose a $1,500 deductible to save $20/month, can you realistically afford that out-of-pocket if you crash tomorrow? According to Bankrate’s 2023 report, 56% of Americans can’t cover an unexpected $1,000 expense without going into debt. So, pick a deductible you can actually pay without breaking the bank.
5. Bundle Smartly—But Compare First
Bundling auto and home insurance can save you up to 25% according to the Insurance Information Institute (III). But don’t assume bundling is always cheaper. Sometimes, buying separate policies with two strong providers gives better coverage at a better price. Always do a side-by-side comparison before bundling.
👉 Pro Tip: Ask for a bundled quote and separate quotes, then run the math yourself.
Real-World Scenarios: Why These Mistakes Matter
Let’s make it real for a second. Here are some true-to-life scenarios showing why smart choices matter.
Scenario 1: Cheap Policy, Big Regret
Emily picked the cheapest liability-only policy she could find. Two months later, she rear-ended a luxury SUV. Damage? $45,000. Her policy only covered $25,000. She now owes $20,000 personally—and it wrecked her credit score.
Scenario 2: No Uninsured Motorist Coverage
Jake decided to save $6/month by skipping uninsured motorist coverage. Bad move. A drunk driver without insurance T-boned his car. Hospital bills? $32,000. His own insurance wouldn’t cover it because he declined UM coverage.
Scenario 3: Outdated Information, Higher Costs
Samantha got married but never told her insurer. Three years later, she realized she could have saved $600 a year with a marriage discount if she had updated her profile.
Car Insurance Buying Checklist
Ready to buy smart? Use this checklist:
✅ Compare at least 3 quotes
✅ Understand all coverage types
✅ Choose realistic deductibles
✅ Ask about ALL available discounts
✅ Check company financial strength
✅ Review customer service ratings
✅ Update your info whenever life changes
✅ Don’t settle—ask questions until you’re 100% sure
Stick to this, and you’ll join the minority of Americans who actually understand and optimize their car insurance.
Final Thoughts: Car Insurance Isn’t One-Size-Fits-All
Car insurance isn’t just a checkbox on your adulting to-do list. It’s a shield. It’s protection for your wallet, your car, and your future. By understanding the mistakes people make—and making smarter moves yourself—you don’t just save money. You buy peace of mind. And let’s be honest: when it’s 2:00 AM and you’re stuck on the side of the road, peace of mind is priceless.