We’ve all heard of the auto insurance scams that cost insurers billions of dollars annually, but could your insurer possibly be scamming you? As it turns out – insurance scams can be a two-way street. While dishonest individuals can stage fake accidents and file fraudulent or exaggerated claims, you could be taken advantage of by an insurance company.
Of course, consumers may not be getting scammed to the tune of billions of dollars on a yearly basis as the insurance industry might be, however, when it comes to your car insurance premiums, every dollar counts. That’s why, you should be aware of the potential tricks some insurance companies might use that could be costing you money. Here a few things to keep your eyes open for:
1. Paying by Direct Debit – If you’ve chosen to pay your insurance on a monthly basis rather than in one lump sum, be sure to read the fine print. There are several ways this could be costing you additional money, especially if using a credit card. Some insurance companies may finance your premium and charge you interest, which in certain cases can be quite high. Furthermore, by using a credit card to make your payment, the credit card company is charging you interest as well. If you plan on going the direct debit route, do it with a debit card and don’t finance.
2. Comparative Quotes and Deductibles – It comes as no surprise that insurance companies want to come out on top as the most attractive option for you when you’re looking for a quote. Some will hike the deductible on the policy to an inflated level in hopes that you don’t notice. In order to give you the best premiums, deductibles as high as $1,000 have been used to sweeten the quote. So, be aware that the deductible attached to a policy quote may not be affordable to you.
3. Increases in yearly premiums – Every year at renewal time, your insurance company informs you of your new rates. In many cases, you face an increase, with little explanation why. And, unless you ask…you won’t know, especially if you’ve maintained a clean driving record. They’ll tell you the new rates are competitive but, often times, they aren’t as competitive as they claim they are. To be sure, you may want to use an auto insurance quote comparison site and apply as a new customer just to prove it to yourself or to them.
4. Automatic yearly renewal – Watch out for this one if they automatically charge your credit card for the lump sum every year. Again, the small print may state something to the effect “we’ll automatically bill the same card next year”. You may want to avoid this if you have plans of switching insurance companies. It can easily slip our minds – that’s why, you should inform your insurer you would rather get the reminder notice instead. Reason is – if you were to get a new policy, you could be doubly-insured, by two different companies, creating a nightmare while you try to sort things out.
5. Do you really need that? – Keep an eye out for sudden substantial increases in your monthly premiums. Read the renewal declaration for changes you didn’t request, such as added collision coverage when it wasn’t there before, not to mention offering $25,000 collision coverage for a car worth only $5,000. Or you may be tagged for higher liability than is required by law. It does happen, so just be aware and on the lookout.
6. Don’t fall for fad insurance policies – Over the past few years, a lot of new insurance companies have sprung up offering policies “designed” for select groups of drivers, such as women or students. While they claim to be directed at a group you might fit in, it doesn’t mean their rates are the best. Compare with other carriers before making your decision so it doesn’t end up costing you more money in the long run.
Don’t overlook your own insurance policy. Make sure you’re getting the best rate on you auto insurance. Why not get a free auto insurance quote today?
Have you been overcharged by an insurance company for something you didn’t request? Feel free to share your thoughts in the comments section below.