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Things to Look Out for When Buying Discounted Car Insurance
For lots of consumers and households, discounted car insurance seems like a great deal. After all, everybody wants to save money on car insurance. Sometimes, however, the cheapest deals are not the best. Buying car insurance is not like buying clothes or other retail items, and getting the bottom dollar policy might come with some pretty bad unforeseen conditions.
Here are some things to watch out for when taking advantage of low-cost auto insurance policies from insurers.
Authenticity
Although it is fairly rare, some kinds of small companies offering discounted car insurance could actually be offering a fake product. Drivers should do a little bit of research on a company just to make sure it is an established writer of auto insurance policies. Insurance fraud is a serious crime, and sometimes, both the writer of the policy and the policy holder can get caught up in legal issues if the insurance product is not entirely valid.
Lack of Proper Liability Coverage
Most insurers know that drivers want to effectively insure themselves against damages they might cause on the road however some insurers offer low-cost policies by cutting the liability coverage involved in the car insurance agreement. In these cases, drivers find themselves holding policies without much value at all, since they will be liable for all of the larger costs involved in bodily injury and property damage if they cause an accident.
High Deductibles or Payout Limits
As with other kinds of insurance, it’s also helpful to look at whether there are any hidden deductibles, exclusions, or other contract clauses that let the insurance company off the hook when it’s time to pay on an auto claim. Cutting down what an insurer will pay is one way that companies are able to offer extremely cheap “pennies on the dollar” auto insurance to customers.
Missing Comprehensive and Collision Coverage
Some drivers don’t quite understand that basic liability coverage offered in the cheapest car insurance policies will not cover any damage to the driver’s own vehicle if they cause an accident. In order to get this coverage, drivers have to take out comprehensive and collision coverage that will also provide for theft or vandalism, as well as other kinds of damages, like fire and flood. Talk to your insurance representative about exactly what a cheap auto insurance policy covers.
Limited Tort Agreements
Another way that insurers cut policy costs in some states is with agreements that limit the kinds of compensation a car accident victim can ask for. Policy holders generally do not want their tort agreements to be limited, but they may not entirely understand all of their options when dealing with setting up the insurance policy. Make sure you have not signed away litigation rights for a few dollars off of your car insurance policy.
No-fault Insurance Agreements
In some states, a complicated insurance set up means that car accident victims will actually be getting compensation from their own insurance companies, rather than from the guilty parties that cause the accidents. In these situations, you’ll want to go over the nuts and bolts of your policy carefully to make sure nothing is missing, so that you won’t get any unpleasant surprises if you need to file a no-fault claim.
Some new or inexperienced drivers are dazzled by discount auto insurance quotes. Low, low prices on auto insurance can be good for your wallet, but many low-cost policies may not really be good deals at all. Rather than settling for the lowest dollar premium for a policy, drivers really need to look at the fine print to see what they’re getting for their money. Here are some of the major problems that happen when companies offering cut-rate coverage trap consumers in poorly constructed policies with skimpy coverage.
Limited Liability
Each state in the U.S. has its own mandatory liability coverage that auto insurers must provide for customers. However, some of them are woefully low, and your state’s requirements may not cover very much of your financial responsibility in a claim situation. The cheapest auto insurance policies may only include a little bit of liability coverage, so ask about this provision before signing.
Conditional Limits
Apart from liability coverage, auto insurers also offer collision and comprehensive coverage. The problem is that they don’t always fill the customers in regarding what events are covered, and what events are not. Does your discount auto insurance coverage your vehicle for theft? How about fire or floods? Make sure your cheap policy isn’t just cutting out the conditional coverages that you may need down the road.
Deductibles
Anybody involved in any kind of insurance knows that a deductible can artificially push insurance costs way, way down. You can get a really cheap auto insurance policy, but here’s the catch: in an accident, you’ll end up paying almost everything. That’s because a deductible is the amount that a policy holder must pay on each claim before the insurer is responsible. Drivers who don’t know about this kind of contractual loophole will end up buying auto insurance that really doesn’t insure them at all, at least for real damages to their own vehicles.
Lack of Underwriting
States require auto insurers to follow specific processes. Other processes help the insurers to build policies that work for customers. Underwriting is often a part of this process. Quick auto insurance offers that don’t take your personal details into account will often be next to worthless. It’s much better to take your time with an insurer and craft a policy that fits your specific needs.
Covering Annual Mileage or Use
Auto insurance companies now ask new customers how much they will be driving a vehicle during the year. Their answer has a big effect on the way the policy is written. The trick to this is that getting a cheaper policy by not providing use coverage may leave you in the dust if an auto insurance company changes their response to a claim because of excess mileage for a vehicle. Be sure to ask about this element of your policy to avoid any unpleasant surprises.
