5 scary Halloween car insurance mistakes

car insurance mistakesHalloween is the time of year to have fun with fear. We all enjoy dressing up as ghouls and goblins and poking fun at worries about things that go bump in the night.

But some things in life are truly frightful, no matter the season. Making big insurance mistakes can come back to haunt you for years to come. 

"If you do not have the needed coverage, your assets are at risk, which can be scary," says Teresa Scharn, staff product director at Nationwide Insurance.

Here are five creepy insurance monsters to avoid this Halloween season -- and throughout the year.


car insurance mistakes vampire1. Vampire: Carrying too little liability insurance

To save money on premiums, many people purchase lower levels of liability insurance. But one lawsuit could suck the lifeblood out of your entire savings.

For example, imagine you smash into another car and cause injuries to the occupants that result in $75,000 in medical expenses. If you have just $50,000 in liability coverage, you are responsible for the remaining $25,000, Scharn says.

"With increasing medical costs, it's even more important to purchase higher liability limits than in the past," she says.

Scharn says one good rule of thumb is to buy as much liability insurance as you can afford.  

If you have sizable assets, additional liability coverage is available under a personal umbrella policy, which can provide up to $1 million in extra liability coverage for just a few hundred dollars in annual premium costs.

Shopping for car insurance? Get your free car insurance quotes here


car insurance mistakes werewolf2. Werewolf: Buying on price and forgetting about service

It's easy to fall in love with insurers who offer the lowest premium rates, says Carole Walker, executive director of the nonprofit Rocky Mountain Insurance Information Association.

"Most drivers put price at the top of their list when shopping for car insurance -- especially in today's tough economy," she says.

But going with a cut-rate price can come back to bite you like a werewolf if you have an accident and your cheap insurer offers less-than-stellar service.

Affordable premiums make sense, but only if you buy a policy from a reputable company that will be there to help you repair the car, pay medical bills or hire an attorney if someone sues you, Walker says. 

She acknowledges that it is human nature to focus on how much your coverage will cost.  

"But the next question needs to be, 'What kind of customer service am I buying for the money?'" she says.


car insurance mistakes headless horseman3. Headless Horseman: Lying to your insurance company

Some people fudge the truth about their driving history or where they keep their car, all in the hope of getting lower premiums.

Others may fail to tell their insurer that Junior has been driving the family car regularly since he got his newly minted driver's license.

But don't let the prospect of extra savings cause you to lose your head like Sleepy Hollow's most famous resident. Lying to your insurer can cost you big time in the long run.

For instance, the penalties for fibbing about a claim can be steep, says Lori Conarton, spokeswoman for the Insurance Institute of Michigan.

"It is fraud to exaggerate or lie about a claim," she says. "In Michigan, insurance fraud is a felony punishable with jail and/or fines."

Over time, rampant fraud causes insurance companies to make up the cost by raising premiums for everybody -- a truly frightening thought!


car insurance mistakes frankenstein4. Frankenstein's monster: Buying too many add-ons to your policy

Many insurance companies offer extra forms of coverage you can add to your policy for a price. But before heading down to the basement laboratory to piece together your own Frankenstein insurance policy, ask the question: "Do I really need this coverage?"

For example, towing insurance is nice, but it may not be necessary for many drivers, says Peter Moraga, spokesman for the Insurance Information Network of California. "Some people may already have AAA or other road assistance," he says.

Also, if your car is especially old and not worth much, carrying collision or comprehensive coverage may not be necessary, Moraga says.

Insurance companies typically look at the value of your car and limit the amount they will pay out to that value. One rule of thumb suggests dropping collision and comprehensive if the value of your car is less than 10 times the annual cost of carrying these coverages. However, in the end, these are judgment calls, Moraga says.

"Drivers need to evaluate their own needs and buy insurance that fits them," he says.


car insurance mistakes mummy5. Mummy: Not asking for discounts

Too often, customers fail to ask for discounts to which they are entitled. But keeping your lips sealed and your thoughts under wraps is a big mistake.

When it comes to saving money, "mum" most definitely is not the word.

"Be sure to ask about discounts that will help save you money," Walker says.

For example, students who have good grades often qualify for lower premiums. Policyholders who take approved driving courses also may net a price break.

If your car has an installed anti-theft device such as an alarm, let your insurer know; you may qualify for a discount. Some insurers also offer price breaks to drivers who work from home and do not commute on a daily basis.

Shopping for car insurance? Get your free car insurance quotes here 

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