Paying less for cheap car insurance is sometimes not because you found a great deal, but more because you don’t have enough coverage.
Finding cheap car insurance can make anyone happy. The less we have to pay out of pocket for something that we cannot touch the easier it is to make the payments on it.
But, getting cheap car insurance may not always be the best thing for you later down the road.
Not Enough Coverage
Even though you think that you have just got a good deal on cheap car insurance from your agent or insurance company, you may be wrong.
The actual situation may be that you just purchased a low amount of insurance coverage. If you purchased too low of an amount, you may not have enough to cover an accident. Which means you will have to pay what your insurance company didn’t out of your own pocket.
As an example, you purchased the minimum amount of insurance that your state requires just so that you can drive. Your liability limits on your policy could look something like this: 15/20/15. This means that the most your insurance company will pay out to the other person if you cause an accident is $15,000 per person for medical bills, $20,000 total for all medical bills for the other party and $15,000 total for all property damage.
With the information that you know about how ridiculously high medical bills are do you think that this amount of insurance will cover all of the bills and other charges if the accident was serious? If you don’t have enough insurance to cover all the bills and you are at fault for the accident you are legally responsible for paying the rest.
Was the money you saved on the cheap car insurance worth what you are going to have to pay out of pocket?
Too High of a Deductible
The amount that you choose for your deductible on your comprehensive and collision coverage is the amount that you will be paying out of your pocket in the case of an accident.
For example, if you have a $1000 deductible and you are in an accident where the repairs to your vehicle end up costing $2500; you are responsible for paying the first $1000 and your insurance company will pay the remaining balance of $1500. If you cannot pay the amount of your deductible you will have to work something out with the body shop or you will have to forego getting your vehicle repaired.
So many times people raise their deductible on their insurance policy just to get cheap car insurance. They then find themselves with a damaged vehicle that cannot be fixed because they cannot afford to pay their deductible.
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