After purchasing your dream vehicle, you are usually pretty excited to drive it. However, before driving anywhere, you must acquire automobile insurance in order to legally be able to drive it. During this process, you are most likely shopping around at several insurance companies and comparing quotes with one ultimate goal in mind, the price. The majority of individuals attempt to acquire the cheapest car insurance possible for numerous reasons.
After buying a vehicle, you are perhaps attempting to save as much money as possible. Additionally, you most likely realize that car insurance is going to be a significant factor that is going to ultimately protect you while driving your dream vehicle. In turn, you end up purchasing the cheapest insurance possible. However, this may not always be the smartest available option. Cheap insurance rarely ever translates to the best insurance. The particular insurance company offers a policy that is significantly cheaper than other companies for good reasons. Below are the reasons as to why cheap insurance is not always the best insurance.
High deductible amounts equals more out-of-pocket expenses:
When you bump your deductible to a higher amount, you can certainly save some money. In the event of an accident, you would be required to pay more money out of your pocket before the insurance company picks up the rest of the bill. Even if you are a safe driver, getting into an accident that requires you to file a claim means that you will be paying a much higher amount when filing a claim.
Although it may be tempting to opt for the state minimum in liability coverage, it may not be the smartest move. If you were to carry a $50,000 limit in your liability policy, and end up causing an accident that injured a driver, their vehicle and their passengers, it is very likely that the damage will be more than your limit of $50,000. Consequently, you could be responsible for the remaining cost of the damages, which can add up very quickly. Clearly, having more coverage generally costs more money.
If you own a newer or more expensive vehicle, it is advised to opt for comprehensive or collision on your policy in order to ensure that your vehicle will be repaired or replaced without you incurring additional out-of-pocket costs. In essence, the more assets you own, the more your liability coverage should be. This is because of you cause an accident that exceeds your liability limit in damages, you may be sued, and ultimately lose several assets such as car, home or savings.
As a result, you should be careful when electing a cheap insurance policy. Generally, a common insurance policy structure has 100/300/50 liability limits. This means that your insurance company covers up to $100,000 for injuries per person, $300,000 for injuries total per accident and $50,000 for property damage per accident.
Dropping uninsured motorist car insurance can be risky:
If another driver who does not have insurance or is underinsured was to hit your vehicle or cause you significant damage, you may be liable for major expenses. Although it is optional, dropping your underinsured or uninsured motorist insurance from your policy can save you money, but can also be extremely risky. The majority of drivers who out for cheap car insurance may have other financial difficulties that make it hard for them to pay for your medical bills as well as any other losses. This is true even if you were to sue them, and the court finds them responsible.
Policy features and standards:
Although some insurance companies may charge you a cheap insurance rate as promised, they also may not offer beneficial options or features to your policy. Some insurance companies become extremely intolerable in the event of an accident, even a small “fender-bender”. Consequently, if you get into an accident, even a minor one, your insurance company will most likely drop you automatically, with no questions asked. This happens because the insurance company has to pay money to fix the other party’s vehicle, or find their medical bills that you caused. These cheap insurance companies will not come with incident forgiveness, small claim forgiveness or comprehensive claims forgiveness. Furthermore, in the event of an accident, you may have difficulty contacting your insurance company to make a claim, since the majority of them tend to have poor customer service.
When shopping for cheap car insurance, it is vital to know that cheaper does not always mean better.