Why The Cheapest Car Insurance Is Not Always the Best

Bargain hunters are always looking for the cheapest prices. Smart bargain hunters know,

however, that buying something based strictly on the lowest price often means lower quality and sometimes results in losing money. Smart bargain hunters also know that you have to do a little digging (research wise) to find the real bargains. That's why they're smart. If you are shopping for the best deal in auto insurance, you would be wise to follow the smart bargain hunters lead. Researching the fine points regarding auto insurance may take a little time and effort, but it's almost always worth it. And with the internet it's not as hard as it used to be. Below you will find some helpful bargain hunting tips as I explain why the cheapest car insurance is not always the best.

There's Cheap and Then There's Cheap

Before we start, it's important to understand what is meant by "cheap insurance." There's really two ways to go here. The first is "cheap" referring to minimum coverages and the resulting lower premiums. The second has to do with cheaper insurance prices at the cost of better service. What you will find is that both of these aspects bleed into one another and maybe they're just two ways of looking at the same thing. Confused? We are getting a bit ahead of ourselves, so let's take a step back and look at each aspect separately.

Cheaper Premiums by Cutting Back on Coverage

It's tempting to cut your coverage down to bare minimums and take on a higher deductible in order to pay the lowest monthly premiums available. All states have mandated minimum liability insurance limits and, as you might expect, each state's limits are different. And those minimums are pretty low. Take Iowa, for example. Iowa law requires drivers in the state to carry the following minimum coverage:

• Bodily Injury: $20,000 per person, $40,000 per accident.
• Property Damage: $15,000.

Sound like enough?  We all know that bodily injury costs (hospital expenses, lost wages, rehab visits, etc.) can add up very quickly, especially if the injuries are serious and/or there's more than one person injured. And if you've ever been in a collision, you know that spending $15,000 to repair even one vehicle doesn't take much damage. Which begs the question: If you get into an accident in Iowa that causes serious injuries to several persons, and you are at fault, who is going to pay the difference between your minimum coverages and the actual (huge) costs for those injuries? The answer is: you. Where are your savings for cheap insurance then? Gone, along with possibly your vehicle, your children's college fund and the equity in your home. 

Now, I know our example is an extreme one, but certainly not out of the realm of possibility. And even if your accident is much smaller, the total costs out of your pocket could still outstrip any savings you were enjoying with cheap coverage. Outstripped by a mile.

At this point, we've only discussed liability insurance. In other words, coverage that pays for damage to the other guy. What about the damages to your car? If you stick to state minimums, your premiums will be smaller but you'll be withoutcollision and comprehensive coverage, and that will likely mean a pretty penny coming straight out of your pocket if you get into an accident or hit by bad weather. Or flood.  Or a theif. 

Cheap Insurance = Less Service

Some people comparison shop without realizing that they are comparing apples to oranges. Well, not when they're comparing actual apples to oranges, but you know what I mean. This happens all the time with auto insurance. People choose a cheaper priced policy thinking they are getting the same coverage as a more expensive one. In most cases, they are not. It's all in the fine print. You know, the stuff most of us don't bother to read. Usually these details in coverage have to do with all those extra services some insurers provide and some do not, like paying for a rental while your car is in the shop. Or how the value of your totaled vehicle is calculated. All those little things that add up to one big thing: less money for you.

It all boils down to the old adage: cost does not equal value. If you really want "cheap insurance," that is, insurance that will save you money over time, don't equate cheap with lower premiums. Seriously analyze your coverage needs in light of all the important factors, like where you live, who will be driving your car, and what extra services you will require. Then do a side-by-side comparison of as many policies as you can get hold of, and don't forget to include any offered discounts. That's what the smart bargain hunters do.

تصنيف : money