Common Mistakes to Avoid When Shopping for Policies

Insurance is complicated. The industry is filled with fine print and options that seem to multiply the deeper you look. It's tempting to make a quick decision just to get it over with, but those shortcuts can cost you. From buying too little coverage to misunderstanding what your policy actually includes, the most common mistakes are often preventable. Before you sign on the dotted line, here's what you should watch out for.

1. Focusing only on price

It’s tempting to choose the cheapest policy, but low premiums can come with high deductibles, limited coverage, or strict exclusions. A 2023 ValuePenguin survey found that 27% of Americans chose a car insurance policy primarily for its low price, yet 1 in 5 regretted it when claims weren’t covered adequately. Always balance cost with value and coverage limits. that simple explanation hides a lot of complexity. Each insurance company has its own underwriting process, pricing model, and data requirements. A comparison engine acts as a bridge between you and each insurer, translating your input into a format each provider can understand, and then interpreting their responses for your benefit.

2. Not understanding the policy details

Many customers don’t fully read or understand their policies. Important details like exclusions, deductibles, and limits are often buried in the fine print. A LIMRA study found that nearly half of life insurance customers could not explain basic policy terms. If you’re unclear, ask questions or consult a licensed agent before signing.

3. Misjudging coverage value

Overinsuring wastes money; underinsuring exposes you to risk. For instance, buying a $1 million life insurance policy when you only need $250,000 strains your budget unnecessarily. Conversely, underinsuring your home might leave you without enough to rebuild after a disaster. Use online calculators or talk to a financial advisor to determine appropriate coverage.

4. Ignoring bundling discounts

Many insurers offer discounts for bundling policies, like combining auto and home insurance. Yet a J.D. Power study found only 48% of customers took advantage of bundling, missing out on savings of up to 25%. Always ask your provider if bundling options are available.

5. Letting policies auto-renew without review

Auto-renewal is convenient but can lead to complacency. Life circumstances change, and insurance should follow. Your home may increase in value, or you might drive less than before. Reviewing your policies annually ensures they remain aligned with your lifestyle and market conditions.

6. Not comparing enough providers

Too many shoppers stick with the first quote or their current provider. Customers who compare at least three auto insurance quotes save an average of $435 annually. Comparison tools like those provided by QuoteKings can help customers get a broader view of the market.

7. Skipping useful optional coverage

Optional add-ons like flood insurance, umbrella liability, or rental car reimbursement are often ignored. Yet 90% of natural disasters in the U.S. involve flooding, and FEMA reports that standard homeowners policies don’t cover flood damage. Consider your lifestyle and local risks before dismissing these options.

8. Submitting incomplete applications

Intentionally or unintentionally omitting information, like a past DUI or a home security system, can result in claim denials or even policy cancellation. Insurance companies verify your data, and discrepancies can be costly. Always provide accurate and complete information.

9. Not vetting insurers

Not all insurance companies are created equal. Some have poor customer service or slow claims processing. Sites like NAIC’s Consumer Complaint Index and AM Best provide financial strength ratings and customer feedback. A slightly higher premium might be worth it for a reputable insurer that pays claims reliably.

10. Overlooking the impact of credit

In most states, your credit score affects your insurance premiums. A 2023 Consumer Federation of America report notes that drivers with poor credit pay an average of $1,012 per year. That’s 115% more than those with excellent credit, despite having identical driving records. Improving your credit profile could save hundreds annually.