Your heartbeat races, your cheeks flush an embarrassingly crimson shade, and your hands start to get clammy and nervous. No, it’s not love: your agent just asked about your auto insurance.
Did you know that most consumers find insurance products like car insurance harder to understand than most other products and services they use? Whether you live in Fayetteville, Arkansas or elsewhere, if you find yourself as one of those consumers, don’t worry, it’ll be our secret! After this blog, you will be able to purchase auto insurance like a pro (and save your nerves)!
Mistake #1: Having state-minimum coverage limits on your car insurance
You should always have more than your state’s requirements for auto insurance. In Arkansas, at the bare minimum, you are required to have liability insurance on your vehicle to pay for any injuries or damage you cause in an accident. If you want to hit the road, you must have:
- $25,000 for bodily injury, per person.
- $50,000 for total bodily injury per accident, if multiple people ended up with injuries from a single accident.
- $25,000 for property damage, per accident.
Property Damage Coverage
If you’re like me, you’re probably thinking, “wow, that’s a lot of money. I should totally be fine if I’m in a wreck.”. But you’re going to want to pump the brakes right there (literally and metaphorically, of course). Let’s start with the property damage coverage. While car prices have risen over the year, the state’s auto insurance limits have not. If you cause a car accident and you have to pay to replace the car, you will probably have to pay out-of-pocket if you have Arkansas’s state minimums. The average price tag on a new car is now approximately $35,000! After your insurance provider paid the $25,000 in damages, you would still be on the hook for about $10,000. That is a headache and an empty wallet waiting to happen.
However, on the bright side, doubling or even tripling your coverage leads to minor increases in your auto insurance costs. We’re talking about the same cost of a few Mocha Caramel Frappo-whatchamacallits a year. Go ahead, be indulgent with your car insurance.
Bodily Injury Coverage
Also, consider the cash it would take to pay for one person’s, or maybe multiple people’s, medical payments due to bodily injury. I mean, have you seen a hospital bill recently? Ouch. According to the National Safety Council, the average cost for an incapacitating injury caused by a car accident is $74,900, which is well above Arkansas’s state requirements. Don’t get caught in a financially stressful situation just to save a few dollars on your insurance each year. You never want to have to use your insurance, but you want it to be there (all there!) if you do.
Mistake #2: Setting a way-too-high deductible on your auto insurance
Most people slap a deductible on their car insurance policy without realizing the full extent of what a deductible is. First off, a deductible is your out-of-pocket cost to help pay for damage to your car, not to someone else’s. Long story short, if your insurance company pays for your repairs, you pay your deductible. However, it is different from a health insurance deductible. Instead of ‘meeting your health insurance deductible’, your car insurance deductible must be paid no matter how many claims you file that year, which is why your deductible amount is so important.
Let’s say you have a $1,000 deductible and since you drive from your home in Fayetteville to Bentonville every day, you’ve had 4 fender-benders and door dings this year (yikes!). For most people, that $4,000 in potential costs takes a toll to the point that they may decide to not repair their car. In fact, it would be pointless to file a claim if the total damages each time were under $1,000!
If it can be so expensive, why do some people decide to have a high deductible? Most insurance shoppers will have a higher deductible so their insurance premiums will be lower. However, when there is a claim and they want to fix their vehicle, they get in a bind because they can’t pay their deductible. When choosing the best deductible, ask yourself how much you can afford to pay out of pocket and do not set your deductible higher than that amount. You can pay $1,000 out-of-pocket? Great! Is a $500 deductible a better fit for you? Perfect! Find what deductible amount you are comfortable with paying and be prepared to pay it in the event of a claim.
Mistake #3: Not adding full-glass coverage to your car insurance policy
We’ve all been there. Imagine this. You are driving down the highway with the radio blasting and singing along to your favorite song when you hear the dreaded ‘thunk!’ of a rock pinging off of your front windshield. Not only did the damage interrupt your solo, but you now have a cracked windshield to fix! Does this situation sound familiar? It should because the most common insurance claim is to repair or replace your vehicle’s glass. However, full-glass coverage is usually not included and must be added to your policy. Even though it is only a few extra dollars per month, most people elect not to have it on their car insurance.
Since the average cost to repair a broken window or windshield is approximately $600, it is strongly recommended that you always have full-glass coverage on your car. Trust us, you don’t want to have the blustering Arkansas winter winds coming in through your broken window. Plus, if you have full-glass coverage, you won’t have to pay your deductible to repair or replace your windshield. It’s a win-win! When you are shopping for insurance, make sure you add full-glass coverage to your auto insurance.
Car insurance can be a bit tricky to get it just right, but if you avoid these 3 mistakes, you will be hitting the road with confidence in no time! Still have questions or want to compare your auto insurance? Give us a call at 479-802-0086 or get a quote started here!