4 Big Mistakes When Applying for Auto Insurance

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  • Drivers need to provide the required information when buying auto insurance.
  • Some motorists make costly mistakes during the process, like not mentioning their car is also used for business purposes.
  • This could end up leading to financial disaster.

These errors could be costly ones for motorists.

Buying auto insurance can be a complicated process, and it's important to get it right. This type of insurance provides a payout in the event of an accident, car theft, or if other issues arise. Many states require auto insurance coverage, and having the right protection in place can help drivers avoid financial disaster when things go wrong.

Unfortunately, sometimes motorists make mistakes when buying coverage and these errors can come back to haunt them. Knowing about some common issues can help drivers avoid problems when buying protection. Here are four errors to be sure to avoid.

1. Not disclosing all drivers

Insurers need to know about everyone who will be driving a vehicle. That's because the insurer is responsible if anyone causes a crash while behind the wheel of a covered car. If an insurer finds out that an undisclosed person regularly drives the car, it can result in premiums going up or a cancellation of coverage.

2. Guessing inaccurately about miles driven

The more miles a person drives, the greater the chance of a collision occurring or something else going wrong. As a result, insurers ask about miles driven when setting premium prices.

Failing to disclose this information accurately could lead to higher premiums than necessary, if a driver overestimates annual miles driven. And motorists who underestimate how often their vehicles are used could end up facing higher premiums or cancellation of coverage if insurers discover the truth.

3. Lying about your driving record

An insurer will ask questions about a motorist's driving record when the motorist tries to buy insurance coverage. Being dishonest is unlikely to work out well, as insurers will independently check the applicant's driver's license record and accident history. Again, a lie about this issue could lead to higher premiums, denial of coverage, or cancellation of coverage.

It's always best to be honest upfront to make sure any insurance quotes are accurate and to ensure coverage won't be canceled after purchase. Some insurers are more forgiving of past problems than others, but drivers can't get an accurate idea of their costs if they don't disclose the truth on their applications.

4. Not mentioning your car is used for business purposes

Motorists can't assume their car will be covered if it is used for business purposes. In fact, it's common for consumer insurance policies to exclude losses that occur in the course of business. This has become an especially common issue when so many people now use their cars for side gigs such as delivering food or driving for a ride-sharing service.

If a car is used for business purposes, it should be revealed to the potential insurer during the application process. That way, the insurance company can accurately assess risk and provide the option for add-on business protection coverage if available.

By avoiding these four errors, motorists can ensure they get the auto insurance coverage they need at a fair price -- and that their policy won't end up canceled at an inopportune time. Auto insurance coverage is too important to mess around with, so drivers should be sure they are disclosing all the information their insurer needs to help them get the right protection.

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