According to a recent Forbes Advisor Survey, 58% of drivers feel they are overpaying for their auto insurance. While this may simply be perception and not based on reality, the fact remains price is of utmost importance to consumers. It is essential to do your research to determine whether you are paying more than you should for your insurance. Here are the common reasons people overpay for insurance and how you can avoid doing so.
Not Shopping Around
One of the most common reasons people overpay for insurance is they do not comparison shop. Whether it is auto, home, life, or any different insurance policy, you cannot be sure you are overpaying unless you have prices to compare your current rates to. This is why it is beneficial for consumers to get quotes at each policy renewal. Doing so will ensure what you are paying is in line with other carriers, and you are not being charged more than you should be. However, it is imperative you are quoting the same coverage. Otherwise, you may find yourself with less coverage than you had previously.
A Poor Credit Score
Insurers base their insurance premiums, at least in part, on a credit-based insurance score. Statistics have shown those with higher credit scores tend to have fewer losses and are, therefore, less risky to insure. As such, having a lower credit score can significantly impact how much you pay for certain insurance policies. To make yourself more desirable to insurers and pay less overall, you should work on improving your score. Understandably, increasing your credit score is something you can only change over time, and it may take time. In the meantime, there are some steps you can take. First, research various insurance companies. Each insurance company weighs credit scores differently, and some may place less emphasis on it than others. In addition, many states are starting to eliminate credit scores entirely, and some insurers are also attempting to follow suit. Research which companies are the best for those with lower credit scores, and you may save some money.
Not Reviewing Coverages
Another common reason people overpay for insurance is by not routinely reviewing their current coverages. Over time, your coverage needs may change, and you may not need as much as you once did. For example, as your car gets older, its value decreases. Carrying comprehensive and collision coverage may cost you more in premiums than you would collect from the insurance company if the vehicle were totaled. Similarly, you may be paying for endorsements on your home or renter a policy you no longer need. You will end up paying more for insurance if you do not review your coverages on a routine basis and make appropriate changes.
Not Taking Advantage of Discounts
Insurance companies will offer various discounts to their policyholders. Some of the more common ones are paid in full, multi-policy, or claim-free discounts. Check with your insurance company to ensure you get all the applicable discounts you are eligible for. In addition, you can often save money by combining policies with one company. If you and your spouse have separate policies, for example, combining them may save you more money. Lastly, not taking advantage of discounts offered by your insurance company can result in you overpaying for your policy.
Final Thoughts
Do not leave any money on the table when it comes to insurance. Avoid these common mistakes and rest easy knowing you are not overpaying for any policy. Contact a local independent agent to comparison shop and review your policies today!
