Common Mistakes Lead to Higher Car Insurance Rates

One of every four buyers of auto insurance is paying more than he needs to because he gave incorrect information when applying, an online insurance broker said Tuesday.

Paxinsu analyzed the auto insurance contracts of 3,390 car owners and concluded that 873 persons, just over 25 percent, erred in the information they provided. About 45 of the subscribers might have not received compensation from the insurer if an accident had occurred.

The most common error, made by over 400 applicants, was an incorrect description of the insured car. Wrong data can lead to higher insurance payments or lower compensation after a loss. About 175 buyers, 20 percent, did not change their policies to reflect their permanent license plate number or did not notify the insurance company of a new address. In some circumstances, such drivers could be considered uninsured.

More than 100 people insured their cars for business use even though they were used only for personal transportation, or bought contracts that insure any driver even though only their family members drive the vehicles. Contracts that compensate all drivers cost 35 percent more than insurance covering only family members. One driver living in Seoul paid 2 million won ($1,550) more than required for six years because of this error.

Some 95 people did not report or did not receive discounts based on driving experience in the military, and 58 subscribers filled in an incorrect age of the youngest driver in their family. Twenty subscribers mistakenly signed two contracts for one vehicle, and two people even bought insurance for somebody else's cars.

"Buyers can receive a 10 percent discount for one airbag and 20 percent for two airbags," said a Paxinsu official. "They have to carefully fill out information to save money on insurance."

by Choi Hyeon-chul