4 Ways Car Insurance Companies Try to Take Advantage of You

Friday, December 4, 2015, 6:00 AM | Leave Comment

Auto insurance providers may offer some great deals to lure you in, and it seems reasonable to switch companies to get the best deals. But behind the smoke, mirrors and clever commercials, auto insurance companies may actually be taking advantage of you.

Insurance is a tricky business and involves a fair amount of effort to get right.

If you want the best deal, you need to closely read the fine print to see what you may be losing by choosing a too-good-to-be-true deal or an insanely low monthly payment, for example.

When you’re shopping around, insurance companies will try to make you feel like their first priority is protecting you, but it’s important to remember that they are for-profit companies whose actual #1 priority is the bottom line.

Keep in mind these 4 ways auto insurance companies may try to rip you off and what you can do about it:

  1. Vehicle Depreciation

    In economics, depreciation of an asset is a given. It’s natural to assume that the value of something you own will go down with age.

    If you look back at your car after using it for ten years, you’ll surely notice it’s not in the same condition as it was when you drove it off the lot.

    But this obvious fact is sometimes trotted out by the auto insurance industry to make you believe they’re offering you a discount.

    Other companies may convince you to switch by offering deals that can save you money. But since your car has depreciated, it’s worth a lot less and it just makes business sense to offer a cheaper insurance.

    Now, this is not to say you definitely should not switch. But first, try to negotiate a better deal with your current provider.

    It saves you time and money if you can simply call your insurance company and ask them to lower the costs based on the age of your vehicle.

    Convince your insurance provider that you’ll leave if they can’t consider the fact that your five-year-old car is worth less than when you bought it.

    At the very least, your current provider should be able to consider additional discounts for you being a bonafide good driver and loyal customer.

  2. Rate Hikes

    When most people go out looking for insurance companies, they look for the cheapest rates. What doesn’t come across in the marketing material is the way some companies hike their rates after minor incidents in the future.

    You may start off with a policy that offers you rock-bottom monthly payments and deductibles, but the company very well could hike the rate through the roof if you ever get into a minor fender bender.

    As you compare offers from different providers, be sure to ask what happens if you’re ever in an accident, big or small.

    Additionally, your rate could be hiked when it comes time to renew. Many policies simply auto-renew, so if you’re not paying attention yours could get renewed at a higher rate.

    Be sure to set yourself a reminder for your renewal date so you can be on the lookout for new fees or rate hikes that may be slipped into your bill.

  3. Hidden Fees

    Yes, the most basic way in which auto insurance can take advantage of you is by sneaking fees into the fine print.

    The hidden costs may not even occur to most customers who sign up for a new insurance policy that seems cheaper than all the others on the market.

    There are higher fees for installment payments. People often opt for the lower amount being paid more frequently, but there is a good chance your provider is charging you for the convenience of these smaller chunks.

  4. Admitting Fault

    If you’ve ever been in even a minor car accident, you know how challenging it can be to deal with car insurance companies afterwards.

    While your main priority is getting your car fixed, keep in mind that one of the insurance agent’s main priorities to find out if there’s any way the company can be released from paying your bills.

    This should be clear to you from the fact that each time you’re asked to recount what happened, the agent asks if it’s OK to record the conversation.

    That’s because they want to have you on the record saying something that implicates you in causing the accident.

    If it’s a complicated situation or you’re at all unsure about what to say, you may want to consult an accident attorney who can guide you in what to say.

Insurance is one of those rare products you are mandated by law to purchase and insurance companies know that.

Sometimes when you’re shopping around, it may feel like you’re simply choosing the lesser of several evils.

It’s easy to make the wrong call, so it’s up to you to learn everything you can about each one of your options to make the decision that’s best for you.

About the Author

John Zaid is an injury and accident attorney in Houston and the founding member of Zaid Law firm. It’s often his job to deal with insurance companies after his clients have been in car accidents, so he enjoys sharing his experience in ways that can help others avoid common challenges. For more advice and expert tips, visit http://www.zaidlaw.com/blog/.

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