Most of us do not realize that we end up overpaying for our auto insurance premium every month. Wondering how? Well, it's because we do not bother to shop around and compare the rates offered by other insurance companies. Instead, we choose to stick to the same company as we renew our car insurance policies every year.
The reasons are many. While some believe they've got the best rates, others do not take the effort to look around, while still others believe that sticking to a company makes them eligible for certain loyalty benefits. However, the fact is that we should compare the policies of at least 3 to 4 insurance companies every year before we make a decision.
Signs You Are Paying Too Much for Your Car Insurance
So, how do you know if you're indeed paying more for your car insurance than you should? Just look for the signs given here.
❖ You haven't combined your policies yet.
Did you know that most insurance companies offer huge discounts when you have multiple policies issued by them? You can take advantage of this by combining your car insurance policy with that for your home. This way, you can save up to 10% on your premiums.
❖ You haven't asked for discounts.
If you haven't asked for discounts yet, ask for them the next time you get your policy renewed. For example, students with a good academic record are eligible for discounts on auto insurance premium if they are good drivers.
Similarly, members of certain organizations such as the MENSA, are also eligible for discounts. Also, teachers, engineers, and accountants are eligible for a "low-risk profession" discount, as it has been observed that these professionals have lower accident risks.
❖ You haven't taken advantage of low mileage.
The Consumer Federation of America states that if a policy holder drives less than 10,000 miles a year, he/she is eligible for a rebate of about $100 on the total amount that he/she pays each year as premium. Think you're eligible? Make sure you inform your insurance agent about it.
❖ You haven't updated your policy in more than 6 months.
Choosing an auto insurance is not a one-time process. You need to look for the latest deals and prices that your insurance company has to offer before you apply for renewal of your policy. It's better to stay up-to-date with the latest offers in the market, for who knows, you might stumble upon a policy that is far more economical than the one you own now.
❖ You haven't read the terms and conditions carefully.
Before you pay for an auto insurance policy, make sure you've read the "fine print" and understood all the terms and conditions of your coverage. Check your insurance bills every month to make sure that there are no additional charges levied by the insurance company.
Sometimes, "hidden" charges can make you pay more than you are required to, as these are costs that you can easily avoid. And if the insurance company does not allow you to, then you should waste no time before choosing another one that does!
❖ You have a redundant or unnecessary coverage.
The bigger the coverage amount of your insurance, the higher the amount you pay as premium. Hence, it is advisable that you decide on the coverage amount carefully.
For starters, consider the current condition of your vehicle. Do you need a coverage that pays for complete replacement of the vehicle or would you be happy to receive a substantial amount for its repair? A policy that offers complete coverage may appear to be the right way to go, but is it really worth it? Just take your time to consider.
❖ You're paying more than many others.
Have you ever had a discussion on insurance policies with your friends or other members of your family, or ever asked them how much they pay as auto insurance premiums? If you notice that most of them are paying less premium than you are, except those with a bad driving record, then it's definitely reason enough to reconsider your policy.
❖ You have a bad credit score and/or driving record.
Your driving record and your credit score also play a key role in deciding the amount you pay as insurance premium. Your driving record indicates how good a driver you are, and your credit score indicates how prompt you are when paying premiums on time.
A person with a good credit score pays a lower premium than with bad credit. In some states, a good driving record can fetch you the benefit of lower premiums as insurance companies assume that you are a low-risk driver.
Now that you know how to tell if you're overpaying for your car insurance, check if you can relate to any one of them. If yes, take steps to reduce your expenditure on the insurance premium. The amount you are paying every month to protect your car, may not really be worth it.