- Ever pay attention to those TV commercials advertising very cheap car insurance? The people in them look like the kind of folks you would rather not meet up with in a dark alley. And, unfortunately, they represent the kind of service you will get from insurance companies that specialize in cheap insurance. The callbacks and payments for claims are slow, and sometimes the people are rude. It all has to do with a substandard mentality about insurance coverage. So if you get into a jam and really need help from your agent or claims adjuster, you could be stuck without a lifesaver.
- Very cheap car insurance has high deductibles and absent coverages. For example, collision and comprehensive deductibles will usually be $1,000 or above. If you hit a tree and have a $900 auto repair bill, you won't get paid anything. Also, similarly, if you decide to forgo collision and comprehensive coverage and get a liability-only policy, you won't be paid a dime for a stolen vehicle. As a result, you will pay more for your losses than if you had just paid for more expensive coverage.
- Another downfall of very cheap car insurance is that liability limits are usually low. Liability is the coverage that pays for an innocent party's injuries or car damages. It kicks in if you cause an auto accident. Unfortunately, if these limits are low, you could exhaust them and end up owing for outstanding medical bills or vehicle damages. Consequently, you won't be absolved from responsibility just because you run out of insurance. An attorney can put a lien on your house to compensate for his injured client. It's a scary situation that does happen to people with very cheap insurance.
- The last way very cheap insurance can hurt you is when you want to get better insurance. If you decide that you want to pay for higher liability limits or add on additional coverage such as collision, it may not be available to you. Some insurance companies and agencies that specialize in subprime, cheap insurance don't offer a wide range of coverages to their customers. So if you want better coverage, you actually have to cancel with them and find coverage with a new company. It's a frustrating process that can take up a lot of your time.
- As you can see, there are a lot of things to consider when you purchase very cheap car insurance. Overall, you must decide if it is worth the risk. If you have a new car or a little money in the bank, it's best to pay the extra money to get adequate, full coverage. It is the only way to protect yourself from financial devastation in the future because of an auto accident.
Comments
jkopinion said
on 4/27/2009 you're right, you get what you pay for! Thanks for the tips. 5*/rec
kp3028 said
on 3/6/2009 Excellent points. The real issue should be getting value for the money you pay for your insurance. There is value in having a trusted agent (who knows you) to call on, when you have a problem. It is important to get help to choose the right policy, and that 'someone over the telephone' isn't not just guiding you so they make the sale. If they offer you the cheapest policy, and get the sale, they make commission; but you can spend thousands more later if the policy you choose doesn't cover you very well, even though in the beginning it was very cheap.