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Are You Making These Major Mistakes When Choosing Auto Insurance? Such as Putting Price Before Coverage? Are Your Deductibles Higher Than You Can Afford? What About Uninsured Drivers?

Because auto insurance is a requirement in most states, virtually everyone will purchase coverage throughout their life. While buying auto insurance is common, many people who buy coverage without doing their homework make major mistakes when they choose a plan.

Making a mistake when you buy car insurance can end up costing you a small fortune.

Here are four mistakes you should be sure you are avoiding the next time you go shopping for a policy.

Choosing Higher Deductibles Than You Can Afford

If you have full coverage on your vehicle, it is tempting to select the highest deductible available to keep your premiums low.

In fact, here are average claim amounts for the last seven years:

YearAverage Collision Coverage ClaimAverage Comprehensive Coverage Claim
2009$3,067$1,389
2010$3,211 $1,476
2011$3,364$1,524
2012$3,101$1,490
2013$2,861$1,585
2014$2,869$1,417
2015$2,950$1,593

Credit to III.org

Depending on your driving record and the type of vehicle, raising your deductibles up from $100 to $1000 may not make a major difference.

Graph showing the amount of coverage when a driver raises a deductible for a honda accord.

This is an example of policy coverage for a 2014 Honda Accord with a 50 to 2,000 dollar deductible for Collision and Comprehensive coverage. When you raise your deductible you decrease the amount of collision and comprehensive coverage. This is a way to save, just realize you are taking more of the risk by doing so.

If you get into an accident, the difference between a small and large deductible can make a huge difference.

Before you jump at taking the highest option, sit down and think practically to ensure that you can afford to dish that amount out-of-pocket if you end up needing to repair.

Graph showing the change in coverage for an auto insurance deductible for 2016 Toyota Camry

This is for a 2016 Toyota Camry. It is best to raise deductibles for older model vehicles. As illustrated, the coverage doesn’t change much for a newer model vehicle for 50 to 250 dollar deductibles. The coverage changes more with 1,000 and 2,000 dollar deductibles obviously.

Putting Price Before Coverage, Pay a Lower Price, but Don’t Sacrifice Coverage

Many companies claim to have the lowest premiums in the industry, but that does not always mean they are the best companies to do business with.

A low-priced policy does not necessarily equate to a quality product.

Even the difference in comparing auto insurance quotes as shown below:

Auto Insurance Company30 Y/O male, minor traffic violationFamily of 4Senior 55 Y/O Married
Travelers$789$912$367
State Farm$854$1,010$335
GEICO$687$867$465
Farmers$797$1,097$437
Progressive$812$1,067$492

Insurance is a product that provides you with financial protection, and if you elect to carry the lowest limits required by law, you are putting yourself at-risk.

You should always assess your needs for coverage before you compare pricing, and retrieve quotes with coverage limits that are sufficient.

Auto Insurance Company25 Y/O Female35 Y/O Male48 Y/O, Married Man
Travelers $1,243$1,383$691
State Farm$2,234$1,514$789
Progressive$1,978$1,678$812
Farmers$2,189$1,324$712
21st Century$2,345$1,583$743

If you sit with agents from Thomson Schindle Green Insurance & Financial Services Ltd. or a similar provider, you can build a personalized plan that meets your needs.

Failing to Protect Yourself Against Uninsured Drivers

What would you do if someone with no insurance hit you? If you were injured, would you have the money or theĀ insurance to pay for your immediate medical treatment?

States With the Highest Uninsured Motorist Rate

RankStateUninsured Motorist Rate
1Oklahoma25.9%
2Florida23.8%
3Mississippi22.9%
4New Mexico21.6%
5Michigan21.0 %
6Tennessee20.1%
7Alabama19.6%
8Rhode Island17.0%
9Colorado16.2%
10Washington16.1%

Uninsured drivers put you at risk every day, and they do not have the liability protection to pay for your medical bills.

States With the Lowest Uninsured Motorist Rate

RankStateUninsured Motorist Rate
1Massachusetts3.9%
2Maine4.7
3New York5.3
4Utah5.8
5North Dakota5.9
6Pennsylvania6.5
7Nebraska6.7
8Idaho6.7
9South Carolina7.7
10South Dakota7.8

You can buy Uninsured Motorist protection, which will act like liability coverage for you and your passengers. If you have rejected this coverage, rethink the decision.

When Do You Need & Not Need Uninsured Motorist Protection?

When Should Have Uninsured Motorist Insurance?When Do You Not Need Uninsured Motorist Insurance?
When you do not have collision or comprehensive coverageWhen not required by your state
When you do not have PIPYou Have PIP or MedPay on Policy
When required by your stateYou Have Comprehensive and Collision Insurance

Failing to Check the Financial Stability of the Insurer

Insurance companies can only pay claims if they are collecting enough money from their policyholders and if they are investing wisely. If a company is not doing this, they will be financially weak and at risk of closing.

You should always check the financial solvency of a company before you consider it an option.

Even checking the complaints as illustrated below:

Top Reasons for filing complaints by consumers against auto insurance companies

Top Reasons for filing complaints by consumers against auto insurance companies. If you research an auto insurance company you will find the complaints filed when researching the ratings. All auto insurance companies will have complaints, but an out of the ordinary number of complaints might be a reason not to buy a policy.

You can do this by going to consumer rating agencies like AM Best and Moody’s and checking the letter grade.

Highest Rated Auto Insurance Companies & Customer Percentage Who Renew

Insurance CompanyFinancial strength ratingsCustomers who plan to renewCustomers who recommend this carrier
TravelersA++84%74%
GEICOA++91%83%
ProgressiveA+96%82%
MetLifeA+96%78%
AllstateA+84%85%
American Family InsuranceA+91%79%
EsuranceA+83%78%
Erie InsuranceA+85%93%
AAA Insurance, CSAA Insurance GroupA+94%87%
Liberty MutualA78%91%
State FarmA90%81%
Farmers InsuranceA-78%86%

You cannot legally drive without insurance, but even buying just the required coverage puts you at-risk.

To avoid making these mistakes, you should not rush your purchase.

Think about what you need, review your coverage options, and then you can select a value-priced plan.

Anica Oaks
A recent college graduate from University of San Francisco, Anica loves dogs, the ocean, and anything outdoor-related. She was raised in a big family, so she's used to putting things to a vote. Also, cartwheels are her specialty. You can connect with Anica here.

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