Car insurance can feel like a maze. Policies look the same, yet small choices can change your costs by thousands over time. The good news: most costly mistakes are easy to avoid once you know where drivers slip up. In this guide, you’ll see the ten most common missteps, with quick tips that keep your money and coverage safe. You’ll also get a few numbers to put things in context and help you decide faster.

• Quick rule: protect against big losses first.
• Goal: pay only for risks that matter.

Keep this list nearby the next time you shop, renew, or file a claim.

Guessing Liability Limits

Many drivers stick with state minimums, which may be only $25,000 per person for injuries—far below real costs after a serious crash. Medical bills and legal fees can quickly pass $100,000. If your limit runs out, your assets and future wages are exposed. Aim for 100/300/100 at a minimum; go higher if you own a home or have savings.

• Rule of thumb: match limits to what you could lose.
• Umbrella coverage can add $1M+ for a modest price.

Bumping liability often raises premiums less than expected, yet it protects against the biggest financial risk in driving.

Skipping Uninsured Motorist

Roughly 1 in 8 U.S. drivers is uninsured, according to industry studies. If someone without coverage hits you, uninsured/underinsured motorist (UM/UIM) steps in for injuries and sometimes lost wages. In many states, it’s optional, but claims for these crashes are common and costly. Set UM/UIM to match your liability limits.

• Ask whether UM/UIM includes underinsured motorists.
• Add medical payments (MedPay) or PIP if offered.

Without this protection, you may rely on your health plan with deductibles and limits, and you might not recover pain-and-suffering damages.

Choosing Deductibles Blindly

A deductible is what you pay first on a claim. Picking $250 “just in case” can be pricey every month. Many drivers can handle a $500–$1,000 deductible from savings and pocket 10–20% premium savings on collision and comprehensive. Run the math: if moving from $500 to $1,000 saves $180 a year, you “earn back” the extra $500 risk in under three years without a claim.

• Keep one month of expenses as your emergency cushion.
• Pair higher deductibles with strong liability limits.

Pick the biggest deductible you can afford without going over your budget.

Ignoring Telematics Discounts

Usage-based insurance (telematics) tracks braking, speed, time of day, and phone use. Safe habits can earn 5–20% off renewals, and some carriers give an instant sign-up discount. These programs help risky drivers improve by showing patterns, like late-night trips or hard stops. Not for everyone, but worth testing if you already drive gently.

• Check whether miles, night driving, and phone use weigh most.
• Ask if poor scores can ever raise a rate with that carrier.

Short city trips, daylight driving, and smooth braking often produce the best results and savings over a policy term.

Forgetting Gap Coverage

If your car is financed or leased, it may depreciate faster than you pay down the loan. Standard coverage pays the actual cash value, not what you owe, after a total loss. Gap coverage pays for the “gap” between the two. If you put less than 20% down or your loan term is 60–72 months, the risk is higher in the first 2–3 years.

• Leasing? Gap is often required—verify it’s included.
• Bought new? Ask your lender or insurer for gap quotes.

Without a gap, a total loss can still leave you with a loan balance and no car to show for it.

Filing Every Small Claim

A $600 fender-bender claim can raise your premiums for three years and lose a claims-free discount. Many carriers apply surcharges for at-fault claims and sometimes for multiple not-at-fault claims in a short period. Use insurance for big losses; self-fund small ones when you can. Track your deductibles: if your deductible is $500, paying a $650 repair yourself might be cheaper long-term.

• Ask your agent for a “what-if” rating before filing.
• Keep photos, receipts, and repair estimates regardless.

One large claim beats three small ones in many rating systems, so save your “claim capital” for real hits.

Overlooking Repair Options

After a crash, “how” your car gets fixed matters. Collision coverage pays for damage caused by an accident, while comprehensive coverage pays for damage caused by things other than an accident, such as hail or theft. Ask about OEM parts endorsements, which require original manufacturer parts, and rental reimbursement, which often costs $30–$50 per year and saves hundreds during repairs. Some states let insurers specify repair shops; you can usually choose your own.

• Verify if labor rates and calibrations are fully covered.
• Check if glass claims affect your rate with your carrier.

Modern cars need sensor recalibration; make sure the estimates list ADAS procedures so your safety systems work as intended.

Not Updating Life Changes

Insurance is priced on facts: address, mileage, drivers, vehicles, and usage. Moving, getting a new job, driving fewer miles, and finishing a defensive driving course can all cut your premiums. Adding a teen or changing ownership without telling your insurer can cause claim problems. If you move from high-theft to lower-theft ZIP codes, rates can drop.

• Report the garaging address and annual mileage honestly.
• Review the drivers listed and remove former roommates.

A quick midterm review often finds savings or fixes gaps, especially after buying a home, paying off a loan, or changing commute patterns.

Shopping Only at Renewal

Prices change often, and carriers weigh factors differently. A speeding ticket can raise rates 20–30% with one company and far less with another. Getting three quotes when you add a vehicle, change address, or hit an age milestone can reveal big differences. Look at the whole package: liability limits, UM/UIM, deductibles, and endorsements, not just the monthly price.

• Check multi-policy and telematics discounts across carriers.
• Ask for loyalty and accident-free longevity credits.

Keep a simple spreadsheet of limits and prices so comparisons are fair, and confirm that billing plans and fees are included.

Misunderstanding Credit’s Role

Many states employ a credit-based insurance score to forecast how likely a claim will be. Better scores often mean lower premiums. Three states—California, Hawaii, and Massachusetts—restrict or ban the practice for auto rates. You can’t flip a switch, but paying on time, keeping balances low, and limiting new accounts can help over time.

• Ask your agent how your state treats credit in pricing.
• Review your reports yearly for errors that add cost.

Since underwriting rules differ, the same driver can see wide price swings. Cleaning up reporting mistakes is one of the fastest legal ways to reduce premiums.

Dropping Comprehensive Too Soon

Comprehensive insurance is frequently cheap and covers theft, fire, water, hail, falling items, and animal attacks. Even older cars can benefit: hail or theft can total a vehicle you still rely on. If your car’s cash value is under, say, $1,500–$2,000 and your comprehensive deductible is $1,000, consider dropping it; otherwise, it often still pencils out.

• Check local hail and theft rates before removing coverage.
• Consider glass-only options where allowed.

Combine this with roadside assistance if you keep the car longer; small annual costs can save you from big, sudden bills later.

Putting It All Together

You don’t need to be an expert to make smart choices. Focus on protecting people first (liability, UM/UIM), then the car (collision, comprehensive), and only then on extras that fit your budget (rental, OEM parts). Review life changes twice a year, quote shop when things shift, and keep one emergency fund to support higher deductibles.

• Protect against rare, costly losses.
• Trim small, repeat costs where safe.

If you want a simple review and clear options for your situation, reach out to a local pro like John Allen – Farmers Insurance for a friendly coverage check and quote.