Are There Risks to Getting Cheap Car Insurance? 3 Things to Know

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According to the Insurance Information Institute (III) data, the average cost of full coverage for a medium sedan was $1,403 and $1,296 for a medium SUV in 2021. But the cost can get significantly higher for drivers with a record of causing accidents and teen drivers. 

For these groups, a cheap alternative feels like a good idea. However, there is always the question of the risks associated with cheap insurance. 

This post will explore some of the possible risks of cheap insurance and everything else you need to know before signing a contract. 

Where You Buy Matters

The proverbial cheap is expensive is applicable in virtually any product you buy, including insurance. However, it doesn’t mean that every cheap auto insurance provider is terrible. Sometimes where you buy your cover matters. 

One option for getting cheap insurance for your car could be a simple Google search. Unfortunately, the results you get from the search engine can be overwhelming, and there is no guarantee that the provider you settle for will offer quality.

A better alternative guaranteed you get the best deals is obtaining auto insurance quotes from an online platform like so you can compare the available options. 

Before deciding on your provider of choice, you may want to look at this guide on interesting facts about insurance that can help you make an even better-informed decision.

Possible Risks of Cheap Insurance

  • Poor Service

Everyone is trying to cut costs, which may be the real driver of buying cheap insurance. You must understand that cheap insurance providers may also need to cut costs too to be able to offer you cheap services. One of the areas insurance companies may look at to cut costs and pass the savings on to you is cutting down on the workforce or slashing their pay. 

A reduced workforce can mean longer wait times for clients or poor services with underpaid employees. But there are other avenues of cost-saving that may not result in poor service. You only need to get that insurer that nails cost-cutting without compromising the quality of services.

  • Lower Coverage

Cheap insurance can come with low coverage that could be exceeded by damages resulting from an accident. If an accident happens under such circumstances, damages suffered by third parties or yourself can eat up into your finances, getting you in a far worse situation than you were trying to avoid by getting cheap insurance.

According to experts, liability coverage of $500,000 should be your bare minimum and $2,000,000 if you want full protection. When shopping for insurance, a good way to avoid compromising on coverage is by ensuring you do not go too low.

  • High Deductibles

Increasing deductibles is a common way for many cheap insurance providers to cut costs. You could be paying low monthly installments that could make you feel like you are in a perfect deal until you get to make a claim, and you are faced with pretty high upfront payments before your insurance can kick in.

Sometimes car owners adjust their deductibles on purpose to lower their premiums. So you may want to consider how a deductible may affect you in case of an accident and choose your policy accordingly.

Final Words

It’s not all doom and gloom with cheap auto insurance. Sometimes cheap car insurance can be a lifeline for persons faced with overly expensive rates, especially after being involved in an accident or for persons that are tired of paying expensive premiums. 

However, it is important to ensure you play safe when going for a cheap auto insurance provider, for example, by relying on reliable cheap insurance comparison tools. Checking out company reviews is also a good idea before committing yourself to a company.