July 11, 2022

Is Cheap Auto Insurance a Good Deal?

It sounds good, right?  The idea of getting the legally required auto insurance for your car, truck, or other auto at an incredibly low – even cheap – rate does have its appeal for many of us; but what are you really getting when you purchase cheap or low-rate auto insurance?  More importantly, are you really getting a good deal and will the insurance provide you with the coverage that you need?

Here are some things you need to know about cheap auto insurance:

  1. The “cheap” may extend to customer service, including you not being able to reach an agent when you have had an accident or need to make a claim and see a claims adjuster.  After all, these auto insurance companies need to cut back on expenses in order to offer these cheap auto insurance rates and one of the first things to go is customer service and ease of access to someone who can help you.
  2. Cheap auto insurance may offer you bare-bones coverage – the minimum amount that you are required to carry by law – but have you really thought about what would happen should you be in an accident?  You could be at fault for an accident and cause significantly more damage to the other driver’s vehicle than your auto insurance covers.  That means you would have to pay, out of your own pocket, for those extra repair or replacement costs.  The same is true if the accident results in a physical injury for the other driver or to passengers in the other vehicle:  you would be liable for paying for their medical expenses beyond that covered in your policy.
  3. When you buy cheap auto insurance, you may be looking at higher deductibles as one way of decreasing your insurance rates.  That sounds good until you make a claim and then you have increased money that you are going to have to come-up with in order to have repairs made.  A thousand-dollar deductible may look paltry when you are signing the paperwork, but may seem enormous when you are looking at needing cash, immediately, to get your vehicle back on the road.
  4. Cheap auto insurance is often offered by small, local companies, who often do not have the fiscal stability to handle lots of claims at one time.  They gamble, instead, on having claims spread out over a period of time.  But if you live in an area that experiences something like a high wind event, and there are multiple claims for damage to vehicles all at one time, your local company may not be able to handle these claims and may start denying them, leading to frustration and time wasted.
  5. Cheap auto insurance isn’t always the cheapest available.  You may be able to get more auto insurance, at about the same rate as what the “cheap” auto insurance companies are offering, by comparing rates and coverage offered by multiple auto insurance companies, especially those known at the national level.

In short, cheap auto insurance isn’t always the right way to go.  Instead of making an impulse purchase because you’re told it’s cheap, contact an auto insurance broker and request quotes on different levels of auto insurance based on what you need, not what you think you can afford.  You’ll likely be surprised at how affordable auto insurance can be.

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John Espenschied is a long-time veteran of the insurance industry. He's worked with thousands of clients over the years, helping to protect their personal and business needs. John's goal is to provide the best advice possible to assist customers in saving money while protecting their property and securing their financial future.
He truly enjoys helping others and takes great satisfaction in providing top-notch customer service. When he's not working, John has fun spending time with his family, golfing, bike riding, and blogging on insurance topics.