Is Cheap Car Insurance Really Worth It
Is "Cheap" Car Insurance Really Worth It?
When it comes to car insurance, customers typically look to find the best price. However, when it comes to auto insurance policies, cheaper is not always better, and there are a number of reasons why.
Cheap vs. Affordable Car Insurance
No matter how you look at auto insurance, the cost is always relative to what coverages and services you receive.
For instance, there is a big and oftentimes unforeseen difference between “cheap" and “affordable" auto insurance. In other words, you can get cheap car insurance that offers very little coverage, but for a little more money you can find affordable car insurance that offers the protection you need at a lower price than what you are used to paying for.
In this regard, it is smart to compare rates for low-cost insurance without simply choosing the cheapest option. Picking the cheapest option by default can leave you hanging in the balance if you have to make a claim, or worse, leave you without a car or cash to fix the damage from an accident.
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The Drawbacks to Choosing the Cheapest Option
As mentioned, there are certain drawbacks to choosing the cheapest car insurance you can find, and many of them can easily be masked by the appeal of a cheap price tag.
One major potential downside to going for the cheapest option is that you may be choosing only the minimum coverages, meaning you'll face higher risk in the event of an accident.
For example, if you choose only the required liability insurance required by your state (and no collision or other optional coverage), you'll only be able to pay for damages to another driver in an accident you cause, meaning you'll have no insurance for your own costs.
High Out-of-Pocket Costs
Also, choosing high deductibles on your auto insurance policy in order to get lower premiums will often leave you with higher out-of-pocket costs at the time of an accident.
While it's easy to set up a high deductible in order to get a lower premium because you don't expect to get in an accident, the reality is it could easily happen. So it's smart to really assess your budget and set a deductible that you can afford to pay in the event of an accident.
Poor Customer Service and Claims Support
When you get the cheapest policy on the market, you may find that the customer service is not there when you need it. Take a look at reviews from customers to try and find out how the company handles claims, customer questions, etc.
"Cheap Insurance" Scams
Customers seeking “cheap car insurance" are targets for those running car insurance scams. These scams are frequently disguised as a deal that seems too good to be true. One day, you try to file a claim and find out your insurance never existed.
In 2011, a fraudulent company in Michigan scammed a large number of auto insurance buyers by offering cheap car insurance that turned out to be fake. Michigan and several other states have begun cracking down on this issue; however, it is ultimately your job to make sure the company you purchase auto insurance from is a legitimate and trustworthy company.
You should research any company thoroughly before handing over any money or personal information. A good place to start in vetting these car insurance companies is shopping online.
Warning signs that the insurance company may be fake include the following:
- The price is significantly lower than the range of prices you've seen from other companies.
- There are typos in the paperwork or advertising from the company.
- The company requests full payment via cash or money order.
- An “agent" offers to backdate the new policy.
- You do not get an insurance ID card.
Whenever you're on a website and shopping around for car insurance, make sure their website is secure, especially if you plan to give any personal information (e.g., for a quote).
If the site's URL starts with “https" (vs. “http"), it's secure, meaning you can count on the site to have security measures in place, and you can feel more confident inputting personal information.
Finding the Best Low-Cost Car Insurance
When it comes down to it, auto insurance is all about finding the best low-cost option that is not necessarily the cheapest or most minimal. After all, you want to feel adequately protected should something happen.
Regardless of the price you end up paying, you should look up valid complaints about the insurance company filed with your state's Department of Insurance to make sure you're purchasing a plan with good coverage as well as customer service.