It is very easy to forget that car insurance policies are essentially contracts, which not only require the premium to be paid on time but also your compliance with the various terms and conditions laid down by your insurer. Some common mistakes that you can easily make due to your ignorance but which need immediate fixing to avoid your insurance policy from getting messed up:
Not Adding a Teenager to the Policy
The insurance company bases its premium on factors like who will be driving the car. If your teenager has obtained a driving license and is driving the car it is necessary for you to inform the insurance company, which will then revise your premium payable. In case there is an accident involving the teen, the insurer might cover the accident but you will need to pay the revised premiums, or the insurer could even refuse to cover and also drop your policy because you did not inform them.
Letting Your Adult Child Move Out to another State with the Car
When the insurance company quotes a premium to you, it takes into account not only the person who will be driving, but also where it will be primarily driven. If the car is being driven in a different area, the risks to the insurer have changed. If you fail to keep the company informed of such changes and if the car meets with an accident, the insurer can deny the claim and cancel the insurance policy. The best thing to do is to have your child’s name added to the title of the car to enable her to buy auto insurance in her own name with the new address. Doing this will also allow the car to be registered in the new state, a requirement that most states have.
Selling the Car to Your Son without Having the Insurance Changed
It is not permissible by law to have insurance on a car on which you do not have an insurable interest. Only the owner of the car, its lien holders, or any co-signers has an insurable interest. If the car has been sold to your son, he will need to buy the insurance. If he is a minor then a parent or a guardian needs to be mentioned in the policy too. Insurance companies can refuse a claim if the change of ownership is not notified. They may also accuse you of fraud on the ground that the change of ownership had been hidden to get the benefit of a lower premium, and cancel the policy.
Using Your Car for Commercial Purposes
When you take out an insurance policy on your car, it is issued only for your personal use. This means that you cannot use your car to deliver pizzas, newspapers, or supplies of any kind on a commercial basis. If you do need to use your car for such purposes then you need to ask for a commercial use insurance policy. Any violation of this may leave you uncovered and liable to pay compensation to other parties involved in any accident of your car as well as having to get your car repaired all by yourself.
Buying a New Car and Not Informing Your Insurer
Your new car that you have bought after trading in your old one will be covered to the same extent as your old car for a limited time. Typically, your insurer needs to be informed about the change in the vehicle in about 14-30 days. Giving coverage automatically is not something you can take for granted. If you have added on a new vehicle without selling off your old one, you will be required to purchase insurance separately before taking delivery from the dealer.
Guest article written by: Gillian Williamson is the owner of a large insurance agency business. Her annual auto insurance guide is very useful reading for customers who want to get the best out their auto insurance.
Auto insurance is most important for financial protection in case of an accident, So everyone should have take care about these mistake and fix them immediately. Thanks for posting this article. Rickey Brady works as a Broker and Producer at Willis, one of the biggest insurance broker agencies in the world. Know more at https://www.behance.net/rickeybrady