You may invest significant time in choosing the right set of wheels and, yet, find auto insurance a dull prospect to ponder over. Even spending 20 minutes on understanding the kind of coverage you need can prevent hassles and nasty shocks in the future. Here are the four most common car insurance mistakes that New Jerseyans are guilty of committing.

Penny pinching by buying minimum coverage

In a majority of the cases, minimum liability coverage is insufficient. Analyze your assets and exposure to choose the most appropriate minimum coverage. In the short-term, minimum coverage can save you money, but it can increase your financial burden in the event of a serious accident. Your liability should accurately reflect what you may lose, which can be anything from thousands of dollars in repair to buying a new car. Minimum coverage won’t cover any of these, so it makes more sense to buy adequate coverage and avoid repenting later.

Being clueless about your policy

There have been many instances where policyholders have asked their insurance adjuster why they cannot collect the full amount and have received a simple answer: ‘because your policy doesn’t cover it’. If you don’t want to go through the fine print of your auto insurance policy, have your insurance agent explain all the important details of the policy clearly and completely to you.

Increasing your deductible without factoring in risk

While you can save money by increasing your deductible, it poses other risks. One is the inability or difficulty in paying such a high deductible after an accident. Fix your deductible keeping risks, savings and cost of higher premium in perspective.

Not being honest with your insurer

Small, harmless lies on your auto insurance application may become big problems when you’re caught by your insurance company. The risks of providing inaccurate information are many, including a higher rate, a denial of claims (which get added to your insurance record) and getting dropped by your insurance company. The five most common misrepresentations are:

– Not reporting all drivers in the household
– Underestimating number of miles driven
– Lying about garage locations
– Not correctly stating how the car is used
– Continue claiming discounts that are no longer applicable

Misreporting information amounts to consumer fraud when the insurance company deduces that your action was intentional. If you have cost concerns or need clarifications, discuss it with your insurance agent and he/she is sure to point you in the right direction.