When people shop for summer vacations, they’ll spend days — sometimes weeks — researching every little detail to get the best deals.
But when it comes to car insurance? Most folks rush through it. Pick a policy, forget it, and just hope for the best.
And that’s a problem, because the wrong choice can cost you thousands (sometimes way more) if an accident happens.
Now, I’m not saying you need to spend a week poring over insurance policy fine print. But a little care upfront can go a long way in protecting you.
Here are five of the biggest mistakes to avoid when picking car insurance.
1. Blindly picking the state minimums
State minimum coverage is often the cheapest option for auto insurance. But it rarely provides enough protection.
Most states only require liability insurance, which covers injuries and property damage you cause to others. But it won’t pay for damage to your car, theft, or medical bills if you’re hit by an uninsured driver.
Let’s say your state minimum covers just $25,000 for property damage. If you total a $60,000 car, you could be on the hook for the other $35,000.
So instead of just choosing the cheapest price, think through the realistic coverage you really need. Look at full coverage, which includes comprehensive and collision. Yes, it costs more up front. But insurance isn’t something you want to skimp on!
Loyalty doesn’t always pay in the world of car insurance. According to Consumer Reports’ 2024 auto insurance survey, 30% of people switched insurers in the past five years. And those who did reported a median annual savings of $461.
Rates can change based on your age, location, driving history, and even your credit score. Insurers also regularly tweak their pricing models, so sticking with the same company year after year could mean overpaying without even realizing it.
Here’s what to compare:
- Premiums for identical coverage
- Deductibles and limits
- Available discounts (bundles, safe driver, good student)
Want to see how much you could save? Use our free tool to compare car insurance quotes across top carriers and start saving more today.
3. Choosing a high deductible with no emergency fund
One common way to lower your monthly insurance premium is to raise your deductible — which is the max amount you pay out of pocket if you have a crash.
But if you don’t actually have that money set aside, you could end up in a financial hole after even a simple fender bender.
A $1,500 deductible might sound like a smart trade-off for low premiums — until your bumper gets crushed and your savings account has $82 in it.
Think of insurance as a two-part system:
- A policy that protects you
- Cash savings to cover whatever your policy doesn’t
If one of those is missing, you’re at financial risk. So before choosing a high deductible, make sure you’ve got enough cash set aside to back it up.
4. Not being honest on your application
It might be tempting to fudge the truth a little. Maybe you say you drive 5,000 miles a year when it’s closer to 10,000.
But if you lie on your insurance application, you risk having your claim denied — or your policy canceled. It’s really not worth the gamble.
Always be upfront about your driving habits, vehicle usage, and past history. It’ll keep your coverage valid when you actually need it.
5. Forgetting to review your policy annually
Life changes, and so should your coverage.
Maybe you moved to a safer neighborhood. Maybe you started working from home and drive half as much as you used to.
A good practice is to set a yearly calendar reminder to review your policy.
It’s not only about right-sizing your coverage to fit your current needs. Annual reviews can also be a great time to look for discounts and savings on your policy!
Do yourself a favor: Take a little time today to look over your policy, and make sure your coverage would actually hold up in an emergency.
And if you haven’t done so recently, shop around and compare different options. Try our car insurance matching tool. It only takes a couple minutes, and you’ll get matched with top insurance providers in your area.
