Really Cheap Car Insurance – Is It Worth It?
Really Cheap Car Insurance – Is It Worth It?So much of insurance advertising these days is done on the basis of being able to save you ‘hundreds of dollars' in just a few minutes. Most of this marketing is done by ‘discount' insurance companies (as they're often called in the industry – usually spitefully). The problem is that the message resonates with people, and we at casurance.com have even used it for our own advertising – though we would argue that we are more impartial about saving people money than an insurer would be, but that's a rant for another day.
Is really cheap car insurance a good idea?
I'm going to try to be as impartial here as possible because the truth is – it depends (don't you hate that!). At Leaky, we used to have a strong focus on just showing our users the lowest price possible, but we realized that does a certain segment of people a disservice because they may not want to make a decision on insurance based off of just price.
Pros of really cheap car insurance
The largest advantage has to be saving money. After all, insurance is technically an aleatory contract, which means that it's a one-way contract. This means that you pay an insurance company your premium and they give you the coverage you are entitled. On a base level, you can argue that this makes insurance a commodity so why would you want to pay more for the same product. Generally, these insurers still have basic customer service levels, such as 24/7 telephone support and you can submit your claims online through most websites.
Cons of really cheap car insurance
The most common rebuttals to this have to do with the level of service an insurance company is expected to provide. For older generations, this means that they remember an insurance agent as a friend who would help them pick out coverages and advocate on their behalf in the event of a claim. It's rare that a discount auto insurer will extend this same level of coverage. The worst form of this happens if you have an accident and you find out that your insurer is slow in paying you or worse, is denying the payment on some technicality. Often, a claim will be followed by being dropped by the discount insurer because they can only price as low as they do because they have a narrow margin of risk per insured person.
So what should I choose?
Obviously, this is a big question, and one that we can't answer for you. However, here's how I would think about it. If I didn't have much money and was just looking to get the minimum amount of required liability insurance for my car, a discount insurer may be a good choice (especially if the choice is that otherwise you can't afford insurance). On the other hand, other insurers may be slightly more expensive, but if you place a premium having a local agent or are thinking about bundling in more detailed insurance types, such as home or life, you may want to go with a more upscale insurer. Often, you'll find that the price isn't that much different.
For me, I had auto insurance with a discount company and home insurance with another company. With the discounts from my home insurance, my auto insurance needed to be $300/year cheaper with the discount company to overcome the ‘multi-line' discount that I would have gotten if both my auto and home were with the same insurer. Just something to consider while you look for insurance.