Actions have consequences, and bad decisions behind the wheel can cost you when it’s time to renew your car insurance policy.
Just ask someone arrested for impaired driving. The ones who do not injure themselves or others will probably tell you about hefty fines and major insurance rate hikes. The same goes for frequent speeders and drivers ticketed for passing a stopped school bus.
What’s more, a driver’s actions behind the wheel are just part of the car insurance equation. Drivers must also decide which types of coverage to carry and how much. Making good, informed choices is crucial. Here are five examples of bad decisions that could cost you:
Lending a car to a friend: Nobody would fault you for lending your pickup truck to a friend who is moving, but know that you are also lending that person your car insurance. If he or she causes a crash, you would have to file a claim, pay a deductible and your rates might go up. If your friend is uninsured and causes a very serious crash, you could even be sued.
Filing too many claims: A car crash is one thing, but filing a bunch of claims for tiny dings and dents will only put you on your insurance company’s radar for the wrong reasons. Serial claimants could see a rate increase. When you consider that, on top of the price of your deductible, it might make more sense to pay for an $800 bumper repair out of pocket.
Texting while driving: This dangerous driving behavior is a big deal to insurance companies. “Insurance carriers today take distracted driving very seriously, and, in some cases, cellphone infractions on a driving record could make the account ineligible for renewal,” said Chris Wukovits, agency manager for AAA New York Insurance Services, Inc.
Not having enough insurance: Buying the minimum amount of insurance required in your state might seem like a good idea at the time, but it could come back to bite you. For instance, if you cause a serious car crash with damages that exceed the limits in your policy, you could wind up paying for the remainder out of pocket. If you don’t have the money, your assets would then be at risk.
Not mentioning a new driver: If your teenage son or daughter is now driving the family car, tell your insurance agent. If you don’t, and your child causes an accident, you could have benefits denied and your policy could even be canceled. When it comes to insurance, honesty is the best policy, and good things happen when you make good decisions.