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Auto Insurance Hidden Costs: What Your Insurance Company Is Not Telling You

Updated: May 31, 2018

There are many auto insurance hidden costs that people do not realize when they agree to a policy.

Sometimes these hidden costs are only noticed later because the buyer did not pay attention when getting the policy.

It is very important to talk with an insurance company about the fine print when it comes to their policy.

Take the time to understand all the different facets of insurance, how much coverage you are receiving and whether there are any hidden costs.

This can prevent any nasty surprises at a future date, which can cost you more money than you were anticipating.

Auto Insurance Hidden Costs: No Coverage for Certain Drivers

When you get cheap car insurance quotes, you are not always getting the best deal in the world. Most of these policies only give you the minimum level of coverage that is approved by the state government.

A parent with cheap car insurance may not be eligible to add an under-21 child to the policy.

In addition, certain perks and advantages you would find in more expensive policies do not transfer over to the cheaper ones. For example, cheap car insurance policies do not allow you to add certain drivers to your policy.

A parent with cheap car insurance may not be eligible to add an under-21 child to the policy. This can result in driving up your auto insurance costs, because you have to get another policy for your teenager. It is sometimes better to pay more for insurance and have the privilege of adding children to the policy at a later date.

While you may still be able to let your teenager drive your car, you are on the hook for all the damage expenses if they get into an accident.

This can end up costing a lot of money, which is the complete opposite of what you want to achieve with cheap car insurance.

Auto Insurance Hidden Costs: Record Checks

When you get a regular car insurance policy, your insurance company will check your driving record every couple of years in order to see if you are getting any traffic tickets. When you try to keep the auto insurance cost low, you are settling for a non-standard insurance provider.

Drivers who make a real effort to avoid traffic violations have nothing to worry about.

A non-standard provider that gives very cheap car insurance will check your record every six months. This means that you may get a crazily low premium offer for the first six months, but this can climb up significantly if they check your record and find any traffic tickets or other issues.

Record checks are not a problem for everyone. Drivers who make a real effort to avoid traffic violations have nothing to worry about.

However, anyone who may have a teenager on their policy is in trouble, because teens are much more likely to get into accidents or get caught speeding.

These added record checks are on example of how cheap car insurance is not always going to continue saving you money in the long-run.

Auto Insurance Hidden Costs: Are There Any Perks?

The biggest downside to cheap car insurance policies is that they do not come with any perks or add-ons. When you get a more expensive policy, companies are happy to add on certain perks that you would normally not receive.

While you may have to pay more in premiums, you will probably save money in the long-run because of the added protection.

For example, most cheap car insurance policies do not have protection against underinsured or uninsured drivers. They do not provide roadside assistance within the policy, and they may not even provide you with insurance coverage when you rent a car.

If any of these perks are important to you, ask your insurance company if you can get them for an additional price. While you may have to pay more in premiums, you will probably save money in the long-run because of the added protection.

For example, the roadside assistance add-on means you do not have to get AAA or a similar roadside assistance company’s service. The roadside assistance offered by your insurance company is usually cheaper than AAA.

Another perk that a lot of people miss out on is the low mileage discount. Your cheap insurance policy probably does not have this add-on, but it could save you a lot of money if you do not drive that much on a yearly basis.

Auto Insurance Hidden Costs: Read the Fine Print

Make sure you are doing your research when you agree to a cheap car insurance contract. Sometimes the fine print can catch you out in terms of the price.

There are some cheap policies that will lock you into the contract for many years at a time.

There are many insurance providers who will show you one quote when you are agreeing to a deal, only to inform you that this price only applies if you pay your insurance premiums on a yearly basis. While some people can afford to pay on a yearly basis, many others do not have that type of disposable income.

If your rate jumps up because you have to pay it every month or a few times a year, you are not really saving much money by getting cheap car insurance.

There are some cheap policies that will lock you into the contract for many years at a time.

While you may think of this as a positive at first, it is a negative. You want the ability to shop around for insurance every year, because other companies are always offering discounts. Being locked in with one insurance provider for three or four years is a mistake.

Auto Insurance Hidden Costs: Missing Out on Discounts

One of the biggest mistake individuals make when it comes to auto insurance costs is that they will not ask about discounts offered by the company.

Keep in mind that every major insurance provider has discounts for getting good grades at college, being part of a union or certain organizations.

Insurance companies want to make as much money as possible. If they can get away with giving you a more expensive policy, they are delighted. While some discounts are advertised when you get your quote, others are only revealed when you ask about them.

Keep in mind that every major insurance provider has discounts for getting good grades at college, being part of a union or certain organizations, having a clean driving record, taking defensive driving courses, adding safety features to your car and much more.

If you are not getting any of these discounts, it may be because you did not ask about them. Talk with your designated insurance agent and ask about all the discounts they are offering right now. If you meet some of the requirements, you could save a significant amount of money on your policy each year.

This helps you pay less for the same type of coverage, or get added coverage for the same price you are paying right now.