Many people overlook the fact that their auto insurance policy is a contract. A car insurance company is not obligated to insure you, and your actions influence the type of coverage you can obtain. To keep your policy in place and your car insurance rates low, you must pay your premiums on time and obey the guidelines of your auto insurance provider. There are some car insurance mistakes you should avoid at all costs.
But how can you follow the rules if you don’t even know what they are?
Policies are lengthy, and the fine print and terminology can be perplexing. Don’t worry. We have got your back. Here are a few situations that Way.com readers sometimes ask our experts about. If any of these sound familiar, now is the time to address the problem before it becomes a problem.
What are the factors that affect one’s car insurance premium?
You let your automobile insurance policy expire
One among the common car insurance mistakes. Being in the grip of a global pandemic for the better part of a year means less revenue and fewer car journeys. You’re still looking for ways to cut costs. Auto insurance is one of the first places people search. You don’t need insurance if you don’t drive much, right? That is incorrect. Insurance providers consider a lapse in coverage if you cancel your insurance and then re-enroll three months later. Insurance firms consider customers who have lapsed in policy to be high risk. People with lapsed coverage are usually lumped in with someone who did not pay their bills or were canceled due to high-risk driving. That is why it is important not to let your insurance expire.
Your live-in partner driving your car
Insurance firms despise it when you “forget” to notify them of a driver who lives with you or often drives your car. Insurance companies cannot bill you accurately if they do not have information on all approved household members, including a girlfriend or husband. If you recently married or moved in with someone, notify your insurance provider right away to have the person added as a driver to your policy. If you don’t, don’t be shocked if your claims are rejected, if you cause an accident, or if you’re ordered to pay back insurance depending on the extra driver. And if your insurance company claims you were deliberately concealing the driver – claim, since your girlfriend has a poor driving record – it could charge you with fraud by misrepresentation. That means your auto insurance company has the right to cancel your policy.
Maintaining a poor credit score
This is one such car insurance mistake that can severely affect your car insurance premiums. Purchasing auto insurance is akin to obtaining a line of credit. The insurer believes the insured can drive safely and pay their bill on time. It’s both a leap of faith and a confidence judgment. Your credit score ranking is one of the tools used by insurance firms to assess insurability and low-risk factors. So, if you plan to skip payments on another installment loan, keep in mind that it will affect your car insurance in the future. Is it worth it to default on the furniture loan if you know you won’t be able to drive when you need to?
Allow your adult child to drive your car when they move to another state
It’s tempting to put off calling your agent and allowing your child to drive away with a family car, but it’s not a good idea. When you drive and park your car in a new place, the risks you face as a customer change. These updates are expected to be communicated to auto insurance providers.
If your child is involved in an accident, there might be a different consideration in insurance. Your insurer can claim you withheld critical details about the vehicle’s location, deny your claim, and cancel your policy. If you want to do it correctly, add the child’s name to the vehicle’s title. And, using her new address, your child will insure a car in her name. This will also encourage your child to register the car in her new state, required in most states.
Using your car for commercial purposes
Most personal auto insurance plans restrict coverage if the car is used to transport products such as pizza, newspapers, packages, or medical supplies. Since delivery drivers are constantly on the road, insurance companies see them as a danger. If you want to be charged to transport goods, you can switch to a commercial or business-use auto insurance policy. If you don’t, and you’re caught driving for deliveries, you’ll be on your own. You might have to pay someone for their injuries — as well as the damage to your car. When you’ve transitioned from pizza delivery to driving people for money, make sure your insurer is aware and that you have adequate coverage. Rideshare providers carry insurance, but it is contingent coverage. You are required to have your policy as primary for some periods, and as a result, any injury expenses will not be covered.
