You've just bought a new car, probably your dream car. The first action you will take is securing it with insurance cover to protect it from potential damage or loss. However, this process is not all-smooth. It may sound straightforward, but it is easy to get a few things wrong, especially if you are easily swayed.
If you have not purchased insurance before, you will be bombarded with several insurance options, and you may end up making the wrong choice. Many new car owners make mistakes from the moment they choose their basic insurance package. After a year when you think you’ve mastered car insurances and on the way to renew one, you still could easily make a mistake.
Avoid These Mistakes When Buying or Renewing Car Insurance
In this article, we walk you through some of the slipups that car owners make when buying or renewing insurance and how to avoid them.
1. Inadequate research and comparison of insurance policies
The first thing that you should put in mind when making a purchase is that several providers in the same niche offer varying services. It's also the case for insurance covers. Insurers provide different packages with various combinations of benefits.
During insurance renewal, you will likely continue with the current package simply because you dislike changing or lack information about the other options out there. One disadvantage is that your current insurer can change the terms of your insurance policy. Very few people would review the terms in a contract renewal, and if you’re like that, you’re clearly shortchanging yourself.
We advise that you compare different insurance options that are available during the purchase or renewal of insurance. The Insurance Council of Australia website provides a list of the insurance providers and their contact details. You can use this information to get an overview of your options before purchasing or renewing insurance.
2. Taking up a very low-premium insurance cover
Insurance cover acts as a financial fall-back if your ride is met by unexpected circumstances such as an accident. If your car has never had an accident, it’s quite tempting to take up cheaper premiums that provide much less cover. You don’t need them anyway, right? Well, let’s see.
While this may save you money for now, it will expose you to substantial financial risk in case of an unfortunate incident. But this does not mean that you should take exaggerated premiums that will drain your finances in a bid to insure your car. You should find a perfect balance between your car's finances and value to determine the most appropriate insurance package.
3. Failing to pay or renew on time
If you have stuck with a single insurance provider for some time, it is easy to forget paying the yearly premium. Remember, an insurance cover agreement is a legal, contractual agreement valid only through the stated period. The gap between the end of your yearly cover and the time you actually pay for new coverage is uninsured and classified as hazardous.
This failure to renew cover may lower the total annual payment but will expose you to financial problems in the event of an occurrence that requires insurance cover. To avoid such a situation, you should sit down with an insurance provider to find a flexible payment structure that suits you best. Most insurers offer an option for monthly instalments if you cannot make timely yearly payments.
4. Taking on too many add-ons
Car insurance companies are like any other business endeavor. To boost sales, they offer incentives to attract customers into taking up extra services, better known as insurance add-ons. You pay a bit more for the extra coverage provided by add-ons.
Unfortunately, too many add-ons can become unnecessarily expensive. To break out of this dilemma of whether the add-ons you have are too much or just enough, you should evaluate the risks you face and prioritise those with high potential risk index.
5. Forgetting to ask for discounts
An insurance provider could be a long-time partner, which is ideal unless you really have to change your insurer. This long-term relationship could make you eligible for some offers and discounts, for example, the milestone loyalty discount.
Most car owners do not take advantage of the existing relationship to seek discounts hence pay the same high premiums for a long time. Consult with your provider as you renew your insurance coverage to see if you're eligible for discounts and privileges. These discounts go a long way in cutting down the costs you will incur on insurance.
6. Failing to update the insurer of major life-changing events
You need to inform your insurance provider of major life events, such as marriage or relocation. This information can be beneficial and may even get premiums lowered.
You may get a better value insurance package, for instance, if you are moving into a safer neighbourhood. Your new situation will likely lower the risk to your car, thus lower the cost of insuring it, too.
Many car owners often make insurance mistakes when buying and, more so, when renewing their insurance. This guide has elaborated on the mistakes, some of which are done consciously and others unconsciously. We hope you have found the tips valuable in avoiding the said mistakes.
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