Why Cheap Auto Insurance Isn’t Always the Best Idea

Why Cheap Auto Insurance Isn't Always the Best Idea Choosing the lowest priced car insurance is typically a risky move. Our team at Affordable Insurance in Aurora, Colorado has been providing our community with quality insurance products for over 20 years. Through our extensive experience, we’ve learned why cheap auto insurance isn’t always the best idea. Keep reading to find out how you can save money without compromising your insurance coverage.

Every driver needs insurance. It is required by law and is a necessary expense that you carefully factor into your budget. Shopping for auto insurance can be time-consuming and exasperating. For first time buyers and young drivers, the jargon used is often confusing. It is too easy to choose the first affordable-looking deal without putting in the time or research needed to make a wise decision.

Yes, going with the cheapest insurance may save you a few dollars in the short-term. What many drivers don’t realize is that the lowest-cost insurance packages also typically come with low coverage limits. If you choose an insurance deal that offers you $30,000 in liability coverage, this is the maximum that your insurance company will pay out in the event of an accident where you cause damages to another party.

Now, imagine you are found to be at fault in a collision with another vehicle. And that car is new and very expensive. The damages caused could cost up to $100,000. Your insurance company will pay the first $30,000 of the expenses, but this leaves you responsible for paying a huge sum out of pocket. That’s why cheap auto insurance isn’t always the best idea.

In fact, your choice in auto insurance could be the difference between facing years of debt or walking away from an accident with the peace of mind that your insurance will take care of all the costs. We want to make sure our customers are informed and empowered to take control of their insurance choices. So, we’ve outlined the best strategy to avoid a nasty auto insurance surprise in the future.

First, decide how much coverage you need for each component of your insurance package:

  1. Bodily Injury Liability – This is the amount that will cover expenses related to the injury or death of other people involved in an accident where you are found to be the responsible party. In Colorado, the legal minimum for this insurance sits at $25,000 per person or $50,000 per incident. Due to the high costs of medical treatments and the relatively infinite possibilities of injury, many insurers recommend drivers to select coverage of $100,000 per person or $300,000 per incident. Choosing this option will increase the cost of your premium; however, it gives you far better financial protection in the event of such an accident.
  2. Property Damage Liability – Colorado law mandates $15,000 minimum coverage for property damage liability. If you have the bad luck of causing more than this amount of damages to another person’s vehicle or property, you will be responsible for the excess. Consider buying the maximum that you can reasonably afford for guaranteed protection. An extra $50 on your premium can buy an additional $40,000 of coverage, which is well worth it in the event of an accident.
  3. Medical Payments Coverage This insurance covers your medical bills in the case of injury to yourself and is usually set at a minimum of $5,000. If you already have health insurance that will cover expenses from a motor accident, you can opt out of this coverage and save some money.
  4. Collision Coverage – This covers damages to your car. Consider the value of your vehicle, how old it is and how much you are willing to spend repairing it before deciding on the coverage limit.
  5. Comprehensive Coverage This will pay for non-collision related damages to your vehicle such as theft, fire, and hail damage. Again, consider the value of your car and whether it is worth insuring, compared to the cost of potential damages before you decide on a coverage limit.

Once you’ve decided on the minimum coverage that you want, you can start the hunt for the cheapest insurance deal, according to what YOU actually need.

Now, take the figures you’ve come up with and compare the prices offered by various insurance agents in your area. Shopping around for a better deal is much easier when you are informed and confident about what you want. You are less likely to be swayed into purchasing insurance that looks like a good deal but isn’t the right fit for you and your vehicle.

As you compare pricing for insurance, consider another reason why cheap auto insurance isn’t always the best idea. It often comes with high deductibles. The overall premium can be reduced to a “too good to be true” figure if you choose to set your deductible at the highest limit. A high deductible can be a dangerous strategy to follow if you find yourself at fault and without that cash on hand.

A high deductible will mean you are responsible for covering the costs of damages up to the amount you have specified in the deductible. It’s often much cheaper for you to have low deductibles and a higher premium if you do experience an accident.

We know that choosing the lowest coverage limit or higher deductibles can be tempting. Spending more than the bare minimum on insurance for an accident that you don’t think will happen can be difficult if you’re on a tight budget. While the difference may cost $50 per month, can you imagine suddenly being stuck with a $2,500 deductible to pay? How about $50,000 in coverage limit overages? Paying a bit extra on your premium provides peace of mind, which is truly invaluable.

Now that you know why cheap auto insurance isn’t always the best idea, you can make a smart decision when shopping around for a package. Just think through the coverage limits and deductibles for each component of your package. Assess the value of your vehicle, be honest about your driving habits and weigh the risk of accidents along your usual routes. Then shop around, compare providers and keep in mind that cheap rarely pays off in the long run.

For more information on finding the right insurance package for you and why cheap auto insurance isn’t always the best idea, contact the friendly customer service team at Affordable Insurance.

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