When you buy auto insurance, you add protection to your vehicle. Since your car purchase is one of the largest investments you might make, you'll want to minimize any financial loss you suffer from an accident. Yet, many people look for the lowest-priced policy they can find. Saving money is a good thing. Yet, buying the cheapest auto insurance may be a mistake in many cases. How can you avoid making this error?
Know What To Expect
According to AAA, the average cost for auto insurance for a medium sedan was $1,233 in 2018 for an annual policy. That may seem like a lot of money, but this provides coverage for the most common reasons for a claim. That may include damage caused by yourself or another driver. In other words, $1,200 per year is a lot less costly than that cost per accident, so to speak.
The most inexpensive types of car insurance are usually liability-only policies. These policies may be at the very lowest level of coverage as well. They might fall just within the state's minimum requirements. These policies may be a fraction of that average cost of a policy. Yet, they often leave you exposed to a number of key risks.
- There is no coverage for damage to your vehicle. If you are in an accident you cause, you could suffer significant loss to your car. You would have to pay for repairs on your own.
- If someone steals your car, you have no financial support available to replace it. Keep in mind that the most commonly stolen vehicles are everyday cars and sedans.
- You have no help if lightning strikes your car and causes a significant fire. In this case, you may have no way to pay for the damage.
- You have no protection against uninsured drivers. Perhaps someone strikes your car with their vehicle, but they do not have insurance. You may be able to pay to sue them, but chances are good you will not collect anything.
- You have limited coverage for injuries or property damage to others. What happens if you strike another vehicle causing serious damage or injury? With bare minimum liability insurance, you have to pay for their losses out-of-pocket. It could even put your home at risk, through a lawsuit.
Because these policies lack comprehensive coverage, collision coverage, and uninsured or underinsured coverage, you lose out in nearly all situations.
The savings from the cheapest auto insurance options are rarely worthwhile. Rather, having a full car insurance policy that minimizes all of these risks could be the best route to take. It may pay for itself in a single claim.