Insurance

10 mistakes people make when buying car insurance

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Image Rob Flynn
Staff Writer

When taking out car insurance, motorists often overlook a number of important details, which can lead to them paying more, or worse, not receiving adequate cover.

When applying for car insurance it pays to be informed, especially about the potential pitfalls and black spots.

In this guide we take a look at 10 mistakes people make when getting cover.

1. Opting for the lowest possible premium 

Budget constraints will naturally have an effect on the level of cover you take out, especially if you’re taking out cover for the first time, but cutting costs at all costs might not be the best avenue to drive down. This is because you might be sacrificing cover that you need in exchange for paying less.

One of the first things motorists should do is assess the value and age of the car being insured to see what cover is needed.

If you have a brand new, expensive car, there’s no point under insuring it when you know you'll be exposed to certain risks. For example, if your car is parked in a public space overnight you might require a minimum of third party, fire and theft cover as opposed to just third-party cover, which is the minimum required by law. 

Likewise, the same can be said for over-insuring an older car that’s a heap of junk.

At any rate, if an insurance company offers a really low premium try to find out more about why that is. For example, you could be getting less cover or paying a higher excess, for example.

Reading the fine print of your policy will ensure you have the right level of cover in place, even if that means paying a small bit more.

2. Not doing enough research

Motorists often don’t do sufficient research before taking out a policy. Choosing the right insurance cover takes time and it shouldn't be done on a whim.

First off, get a quote from as many insurers as possible and don't be afraid to look at specialist or less well known providers. 

Always make sure a quote includes the specific cover you require, such as for lost car keys or windscreen protection for example. Not all policies cover the same things so be sure you know what you're insured for.

And while the level of cover your policy provides is perhaps the most important consideration, drives often disregard the reputation of insurance companies in exchange for a low quote. Take the time to research other areas of an insurer's offering such as their online experience, customer service track record as well as their claims-settlement ratio.

3. Avoiding add-ons and extras

As a wise person once said: "Being underinsured is as almost as bad as not being insured at all", and this is certainly true when it comes to insuring your car for the road.

While a low insurance premium is desirable, it's not much good if you have to sacrifice the extra protection and cover which you need.

Add-ons from most insurers will include cover for broken glass (windscreen, windows, sunroof), lost keys, breakdown assistance, and all the way through to protection for your no-claims discount.

When applying for car insurance make sure you carefully consider what add-ons are available to you and what it will set you back.

4. Lying on your application

When taking out car insurance an insurance company will build up an accurate driver profile for you which calculates your risk, and is all based on the information you provide. For this reason being completely honest with your insurance company is paramount. Nothing good will come from even the smallest lie because should your insurance company find out, you could stand to lose your cover, have a claim rejected, or even jeopardise your ability to receive cover elsewhere in the future.

Insurance companies require consumers to abide by the principle of 'utmost good faith', in other words, the information you provide must be 100% accurate and up to date. This includes being truthful with where your car is parked overnight to how much driving experience you have.

Fronting is also a common type of insurance fraud which many people may think is harmless but can actually lead to them losing their cover and potentially being prosecuted. This is when the main driver of a car is not the one stated in the policy.

The key thing to reiterate here is to be accurate and truthful with all your information. Chances are your insurer will find out at some point anyway so best not to lie before you even place your foot on the accelerator.

5. Choosing the wrong class of use

There are a number of terms to be aware of when taking out car insurance, one of which is ‘class of use’. This is your insurance company simply asking what you will be using your car for. The class of use is an important factor in calculating your premium so it’s important to be completely accurate with this information.

Most drivers will be using their car for social, domestic and pleasure purposes, however, you must also inform your insurer if you’ll be using your car to travel to and from work at any point as this will also affect the price quoted. Most insurers will include this as an option when filling out a quote online or will discuss this during a phone consultation.

If your car is a requirement for your work, for example if you're a sales rep or someone who travels to meet clients frequently, you must also inform an insurance company as this is similarly regarded as a separate class of use to simply travelling to and from work.

6. Not notifying your insurance company of penalty points 

Let’s face it, nobody wants to be in a position where they have to contact their insurer about having received penalty points. And while it’s not usually the end of the world if you receive one or two points, some drivers make the mistake of thinking it’s OK to not inform their insurer until their policy is up for renewal. However if you're convicted of any type of driving offence, including getting penalty points, you must disclose this to your insurer as soon as possible, not just at renewal time.

While most drivers with four or fewer penalty points generally won’t have a problem getting insured, they will usually have to incur a loading penalty on the cost of their premium. However, this will depend on the insurer. Some insurance companies may increase your premium if you receive even two penalty points, some may only charge if you hit five or more, while some may only load for certain offences. Regardless of this, honesty is always best when it comes to your car insurance as we've mentioned above.

7. Not notifying your insurance company of an incident

Whether you’ve been driving for 10 years or more, or if you’re new to the road, chances are you’re likely to get a few minor bumps and scrapes when driving with other road users. While you may not always want to make a claim if you get into an accident, and sometimes prefer to cover the cost of any repairs yourself, you must always let your insurance company know should something happen.

Your insurance company is responsible for insuring you and any incidents that could change the shape of your driving profile are important when calculating an accurate premium. Furthermore, you must also confirm whether somebody else was involved in the incident and if they received any injuries or damage to their vehicle in case a separate claim is eventually made down the line. 

8. Being unfamiliar with your policy

It’s all well and good taking out car insurance at a low cost but it's meaningless if you're not completely sure what you are and aren’t covered for. As mentioned above, it’s always best to do your research before taking out a policy, but even more important is making sure you know the ins and outs of the cover you take out and what exactly it contains so you know what you're entitled to should you need to make a claim.

On of the most important components of your insurance policy, mainly for those who have been driving for some time, is your no-claims discount. Being aware of exactly how long you’ve gone without claiming will help to keep your insurance costs at a low. Consumers should also be mindful of small things such as cover for spare keys as some policies will not cover you if you lose them.

If you’re unsure about your policy and would like some clarification make sure to reach out to your insurer today with the number provided on your policy document.

9. Staying with the same insurer

As with any basic utility or insurance product, drivers will always benefit greatly from shopping around for motor insurance and not relying on any one company. Insurance companies benefit from consumer inertia, and despite car insurance being one area in which consumers tend to be a bit more savvy, many customers still pay far more than they need to. Loyalty doesn't pay.

Another important point to note is that insurance companies are not allowed to price discriminate against customers based on their sex. For those familiar with car insurance websites targeted specifically at women, it’s worth noting that this is solely for marketing purposes and it's possible to apply for insurance wherever you choose.

Whenever your policy renewal date is approaching be sure to get quotes from as many insurance companies as possible to see how you can improve the cost of your premium.

10. Not receiving the discounts you qualify for

When comparing make sure you don't miss out on any discounts that could help to lower your premium. Every little helps, to borrow a phrase.

Car insurance companies offer discounts for however many years no-claims bonus you carry, as well as for things like anti-theft devices installed in your car, and even where your car is parked overnight.

So, don’t be afraid to ask for a complete list of the things each insurer offers discounts for, and make sure that you receive each one that you’re entitled to as this will help you to get the best deal.