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Index | Auto Insurance | Pitfalls of Car Insurance

Pitfalls of Car Insurance

Car Insurance should be approached with proper knowledge and care in order to avoid common pitfalls. First off, it should be reviewed on a regular basis to insure that you have the necessary coverage adequate for your current situation. Auto Insurance must be updated as soon as your life circumstances change, for instance, if you buy a house and want your liability coverage increased.

In order to avoid one of the major pitfalls of Car Insurance, i.e. high insurance rates, always shop around for competitive quotes. Besides using an Auto Insurance comparison service online, you can also contact the carriers directly and check what they have to offer consumers. Average Car Insurance rates are calculated based on a number of factors: your age, your marital status, your occupation, the kind of car you drive, your credit score etc. These rates are usually more expensive than the rates you could get with a little effort on your part. Avoiding high rates pitfall will save you a great deal of money over the long term.

It is most helpful to keep in contact with your insurance agent. Discuss what can be left out from the average insurance package and what can be added. This way you can be sure that you are getting the best coverage possible at the best rates. Remember that informed consumers never overspend.

Insufficient coverage can be another pitfall when it comes to Car Insurance. On the one hand, you may think that "insufficient coverage" sounds odd as there is a state minimum required coverage that should be sufficient for all drivers. On the other hand, each driver has his or her own personal situation which state cannot take into account. For example, the state minimum required Car Insurance won't protect you in case you are an owner of substantial assets or property. Before determining the limits of your Auto Insurance, talk to your accountant or your income tax specialist to decide what level of coverage will suffice for you.

Pay special attention to clauses in insurance policies. Some of them will allow you to pay lesser premiums, but in return you will get limited coverage. Always read the fine print of your insurance policy.

In case your Car Insurance does not fully cover the damages in an accident in which you are at fault, you will have to deal with all the bills personally, for example such as property damage repair, medical expenses of injured parties etc.

Consider insuring valuable items in your car. Some people tend to have cash or some rather expensive stuff in their vehicles. In case the car gets stolen, or some valuable objects are stolen from the car, the car owner will be allowed to file a claim only to the extent of the car value and not the contents.

The opposite problem is having too much coverage, meaning having the highest limits of all available types of coverage. In this case, the premiums you will have to pay may be beyond your budget.

Still, many drivers in the U.S. tend to think that Car Insurance is unnecessary. The biggest pitfall of Car Insurance can be the uninsured motorist. If you have an accident involving a person without the insurance, you are bound to have serious financial troubles.

Another pitfall may wait for you in case, due to some reason, you want to terminate your Car Insurance policy. Most insurance companies will allow you to cancel your policy at any time during the policy term. However, you must send a written notice stating the date of cancellation. Mind that if you don't give your insurer sufficient notice, your insurance company will automatically bill you in advance for the next term's premium payment. If you chose to terminate your policy and failed to send notice of cancellation, it could end up costing you money, and going on your credit report.

You should make sure that you are well aware of all rules and conditions concerning your Car Insurance policy, especially the conditions for claiming and circumstances under which your insurance company won't pay out. Note that each individual insurance company normally has certain obligations which Car Insurance policy holders need to comply with to have their claim paid out: taking the necessary precautions to avoid damage or loss in the first place, accurate and truthful information about the accident etc. It is possible to avoid all Car Insurance pitfalls if you are informed and all your decisions are carefully thought up.