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In 2023, the national average annual cost of car insurance was $3,017, according to The Motley Fool Ascent’s research into car insurance costs. Paying around $251 a month out of a bank account is a lot of money, so it’s not surprising that many people want to look into cheap auto insurance.
The problem is, while it’s good to shop around to find affordable coverage, it’s not necessarily a good idea to get cheap coverage. Buying affordable coverage means getting the lowest price possible for the best quality coverage, while just looking for cheap car insurance could mean compromising quality in search of savings.
There are huge downsides to just focusing on price at the expense of quality. Here are the two disadvantages drivers need to know about.
1. The coverage might not be comprehensive enough
One of the biggest mistakes drivers could make when it comes to car insurance is skimping on the coverage they buy to bring premium prices down.
For example, the average cost of a liability-only car insurance policy is $787, while the average cost of a comprehensive policy is $3,296 per year. It would be cheaper to buy liability-only coverage. But this would mean purchasing only bodily injury liability and personal property liability coverage — which would only pay for damage caused to others in the event of an accident.
A driver who doesn’t get a comprehensive policy would be left without insurance coverage for their own vehicle. They’d get no payments from their insurance company if their car was stolen or damaged in an accident not caused by others. So, while they would save on premiums, they could be out tens of thousands of dollars if they had to pay to replace their entire car out of pocket after an accident happened.
2. The insurer may not handle claims as effectively
There’s another potential downside. Some affordable insurers offer good quality customer service, but others do not.
Insurers who keep prices low by hiring a limited number of agents or a limited number of adjusters might not have someone available to provide quick assistance with policy questions.
Other insurers may charge low premiums, but when claims happen, they might deny legitimate claims or lowball their policyholders and offer them far less money than their car is worth or than their repairs actually cost.
Dealing with these problems when coping with the aftermath of a car accident or a car theft could be really annoying — and could leave drivers out a lot more money than if they’d just paid a little extra to get covered by a more reliable insurer.
Drivers should check the complaints database maintained by the National Association of Insurance Commissioners to see how insurers they’re considering stack up. Reading online reviews to find the best auto insurance companies can also be helpful.
While price should be one factor in deciding which company to choose, don’t just opt for cheap auto insurance at the expense of quality or coverage — otherwise this decision could be a major source of regret in the future.
Our best car insurance companies for 2024
Ready to shop for car insurance? Whether you’re focused on price, claims handling, or customer service, we’ve researched insurers nationwide to provide our best-in-class picks for car insurance coverage. Read our free expert review today to get started.
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