We all know that everyone wants to save as much money as possible on their auto insurance. However, some mistakes can be made that will cost you more money in the long run if you are not careful.
We wanted to spend this post showing Arvada and Denver residents how cheap car insurance can backfire on you and cost you more money.
Here are seven ways cheap car insurance can backfire:
1. Not enough liability insurance to cover your assets
Many states have minimum limit requirements of only $10,000 or $15,000. Unfortunately, those limits are no longer enough to protect you and your family from any accurate claim.
All it takes is to hit an SUV, and your insurance limits will be exhausted entirely, leaving you on the hook for the difference.
Also, many consumers are told they have full coverage but don’t realize the limits on the policy they were sold were grossly inadequate to protect them and their families.
Tip: We recommend most consumers purchase a car insurance policy with limits of at least $100,000. Though more expensive, the limits are necessary to protect you and your family.
2. Raising the deductible too high
We all know that raising your deductible can help lower your auto insurance premiums. However, you have to be careful not to raise the deductible so high that it makes repairs on your vehicle unaffordable.
Tip: Avoid purchasing a car insurance policy with deductibles higher than $1,000 on comprehensive and collision coverage.
3. Watch out for the fine print
In many cases, purchasing a cheap auto insurance policy can restrict or limit the coverage within your policy.
These are often considered no-frills policies that limit the coverage and protection the policy provides.
Tip: Work with an insurance agent who understands all of the coverages and exclusions in your insurance policy to be sure they can provide proper advice on whether the policy you purchase is a good value.
4. Higher rates for tiny infractions
Cheaper auto insurance policies tend to be less forgiving, with minor traffic violations or accidents resulting in high rate increases or your policy being non-renewed by the insurance company.
Tip: Ask the insurance company or agent presenting your quotes about their practices when customers have minor infractions.
5. Bad customer service
Take a look online and talk to neighbors and friends about the reputation of the insurance company you are thinking of purchasing your policy through. While the premiums may be cheaper, you could suffer regarding customer service or a claim. You can also check with your state’s Division of Insurance to determine the complaints filed against the insurance company.
Tip: Try to only work with companies that have an ‘A’ rating from an agency like A.M. Best and that you have verified have a good, solid reputation.
6. No extras when you need them
Cheap auto insurance policies may skip on additional policy options that can come in handy at a later time. For example, rental car reimbursement (pays for a rental car while your vehicle is being repaired for a covered claim) and emergency roadside assistance (provides services like towing or tire replacement) cost less than $20 but may be left off your policy for the savings.
Tip: Make sure your insurance quotes show the optional coverages and price breakdown so you can decide on their purchase.
7. Not enough protection for you and your passengers
To save money, many consumers will forego necessary insurance coverages like uninsured and underinsured motorists coverage. These two insurance coverages are vital, especially if you are involved in an accident where the other driver does not carry enough coverage, or it is a hit-and-run accident.
Tip: Purchase uninsured/underinsured motorists coverage with limits that, at a minimum, mirror your current liability limits.
The key to saving money
The key to saving money on your insurance is to evaluate your options and make an educated decision thoroughly. The easiest way to do that is to work with an independent insurance agent. An independent insurance agent can provide multiple quotes from top-rated insurance carriers. This allows you to save money on your premiums without falling victim to any of the pitfalls above.