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Top 6 Mistakes People Make When Buying Auto Insurance

When it comes to auto insurance, everybody tries to save money. Insurance is the one thing you have to buy that you hope you never use. And you just don’t want to pay too much for something you don’t want to use!

So, people often look for creative ways to lower their insurance costs. Sometimes these decisions that people make trying to save money can cost them more in the long run.

As a veteran insurance agent, I have been helping my clients make solid, informed choices about their insurance purchases for more than twenty years. 

But, as an agent, I can only guide my customers in their insurance purchases. Ultimately the decision is theirs to make. 

And there have been times when my clients have made a choice on their car insurance to save a few dollars only to have it come back and negatively impact them later – often costing them more in the end. 

To help you avoid these common mistakes, I’ve written this short article identifying each error and explaining how it can end up costing you in the long run.

Here are the top 6 mistakes people make when buying their auto insurance.

  1. They set their deductible too high.
  2. They set their coverage limits too low.
  3. They fib on their insurance application – sometimes even unknowingly!
  4. Their agent doesn’t help them find discounts.
  5. They choose to work with a large national internet-based agency rather than a local independent agent.
  6. They switch insurance companies frequently – sometimes every year.

Let’s get started looking at these mistakes and discussing how they may cause you to pay more in the end.

1. Setting Your Deductible Too High

As you raise the deductible on your auto insurance policy, you can expect your premium rates to go down. This can be very appealing to many auto owners looking to save some money.

The problem arises when you have an accident or damage your car and need it repaired.

Before you can have your vehicle repaired, you will have to pay the deductible out of pocket first. 

If the repairs are going to cost more than you have available, you could be in big trouble when it comes to getting your car fixed and back on the road.

Setting your deductible too high can leave you shocked when you have to pay the deductible before having your vehicle repaired.

If you choose a high deductible on your car insurance, make sure you have enough money to pay the deductible. If you don’t have enough for your deductible, you may end up without your vehicle until you can pay the deductible.

2. Setting Your Coverage Limits Too Low

The state of Pennsylvania requires very low limits when it comes to auto insurance. You only have to carry $15,000 in liability and $5,000 in property damage coverage on your auto insurance policy by law.

Low liability limits do lessen the amount of your auto insurance premiums.

The problem with this solution for saving money on auto insurance becomes evident after you cause an accident.

Most accidents today will cost more than $5,000 in property damage. In 2021, the average vehicle cost over $42,000. 

If you total someone else’s car, do extensive damage to their property, or even take out a telephone pole, you can be held responsible for paying for the damage. If you have state minimum limits on your auto insurance policy, you may not have enough to cover the damage.

If you do not have enough insurance to cover the damages, you can be sued to cover the remaining amount. Your assets can be taken to cover the damage.

When you set your liability too low on your car insurance, you leave yourself open to a potential lawsuit if you cause an accident. Your personal assets are at risk if the damage you cause is greater than your car insurance liability. You may have to pay more out of pocket than you would have if you had paid for higher limits.


3. Lying On Your Car Insurance Application

Lying on an insurance application is a big deal. If you are not truthful when you fill out your application, the insurance company could ultimately deny your claims.

In terms of auto insurance, the two areas in which individuals are prone to dishonesty are when it comes to listing young drivers on the policy and disclosing how the vehicle is being used.

Young Drivers

Everyone knows that adding a teenage driver to your car insurance significantly increases your premium. So, you may be tempted not to add a young driver to your policy.

However, if your teen driver uses your vehicle and causes an accident, the insurance company may deny the claim. You can also have your policy terminated for leaving out such information.

Vehicle Usage

More commonly, individuals don’t disclose how they use their vehicle. If you use your vehicle for any business use, you need to inform your car insurance company. 

For example, if you are a salesman and use your vehicle to go on sales calls, you are using your vehicle for work purposes. If your vehicle is not designated as being used for work and you have an accident on your way to a sales call, your insurance may not cover the claim. 

If you are dishonest on your car insurance application, you leave the door open for a claim to be denied. Make sure that your vehicle’s usage is correctly listed on your policy and that you list any young drivers in your household on your policy. 

Lying on your insurance application may give you lower rates, but one accident could end up costing you thousands of dollars.


4. Not Looking for Discounts

Did you know that most insurance companies offer discounts to their policyholders? You may qualify for a discount if:

  • You purchase your home insurance, life insurance, or other insurance products from the same insurance company.
  • Only use your vehicle seasonally.
  • Own a vehicle that includes safety features like assisted parking or lane assist.
  • You set up automatic withdrawal for your insurance premium.
  • You pay in full the annual premium amount on your auto insurance policy.
  • You willingly use a telematic device to record your vehicle’s usage.

A top-notch insurance agent will seek out discounts for you. They should help you find ways to save money on your insurance.

Most insurance companies offer discounts on auto insurance. Your insurance agent should take an active role in helping you find discounts.

You can also ask your agent if there are any other insurance discounts you might be eligible to receive.

5. Buying Insurance with a Large On-line Company

Large national online insurance companies have increased in the past decade. These insurance companies may offer the coverage you need at a lower price than you might get at your local independent insurance agency.

Now, I realize I am biased when it comes to shopping with a local independent insurance agent. I’ve been one for over twenty years.

At the same time, I have numerous customers come to me after buying insurance with a large national insurance company. Their general concerns and complaints are the same.

The biggest reason they switch back to a small insurance agency is the care they get when they have an insurance problem. 

When you buy your insurance from an independent insurance agency, you are typically assigned to a specific agent. That agent represents you to the insurance company. That agent helps you navigate claims and negotiate your insurance premiums.

With a small independent agent, you will talk to the same agent whenever a need arises instead of a person answering calls at a call center. 

You are not just a claim number or policy number when working with an independent agent. Most independent agents know their clients and build a lasting relationships with them.

When you buy your insurance with a large online insurance company, you may end up just a number when you file a claim or have a problem with your insurance policy. You can not guarantee that you’ll reach the same person to help you navigate your insurance issues. 

With a local independent insurance agent, you can build a long-term relationship and have a personal advocate for your insurance needs.


6. Switching Insurance Companies Every Year

One final tactic that people often use to save money on their insurance policy is by getting quotes from multiple companies each year and changing to the best price.

This might seem like a wise way to do your insurance shopping, but it usually leads to higher insurance premiums in the end.

Insurance companies appreciate and reward customer loyalty. 

Insurance companies also see your insurance record when they review your application. They can see how long you have kept your insurance at each company.

Practically here’s what I mean. Let’s say after three or four years with ABC Insurance Company, and your rates have a significant increase. Maybe you added a teen driver to your policy. Maybe the rates just went up, and you don’t know why.

You decide to shop around for better rates. When you apply to XYZ Insurance Company, they can see that you have had your insurance with ABC Insurance Company for multiple years. 

Even though you will be new to XYZ Insurance Company, they will recognize you as a loyal customer since you kept your insurance at the last company for multiple years. They will discount your policy accordingly. 

If you had only been with ABC Insurance Company for a year, XYZ Insurance Company would not give you their most favorable rate.

Insurance companies offer their most favorable rates to long-term customers. Insurance companies reward customer loyalty.

Switching insurance companies often might save you a few dollars here or there, but great long-term rates are only offered to loyal customers.


I’m looking for an independent agent to help me with my insurance. Would Baily Insurance be a good fit?

If you’re looking for a local independent agent in Southwestern Pennsylvania, Baily Insurance might be an excellent fit for you. 

Our insurance team has years of expertise to help with all kinds of insurance needs – personal and commercial.

To determine if we would be a good fit for your insurance, let me share with your our values. That way, you can see if they align with what you are looking for in an insurance agent. 

Our insurance team is committed to helping our clients find the best coverage at the best insurance companies at a competitive price. We work with insurance companies that are highly rated in the insurance world, meaning they are good at paying out claims, providing excellent coverage, and providing fantastic customer service.

Our team is not about finding the cheapest insurance out there. We believe that cheap insurance does not often lead to the best protection for our clients.

And protecting what matters most to our clients is what we do it’s what we’ve been doing since 1880.

So, if you’re looking for an agent to advocate on your behalf and to help you protect your family, your home, your assets, and your business, we just might be the team for you. 

Give us a call today to interview us for the job of taking care of you and your family!

We’re looking forward to serving you!