Why is the Cheapest Car Insurance Not the Best?
A car insurance purchase must be done in a manner that minimizes your costs and maximizes your benefits. While it is important to go for a cost-effective policy one must avoid ‘cheap’ policies at all costs, for it will be counterintuitive to the very purpose of having an insurance cover.
Investing in a comprehensive insurance policy is an asset and must not be seen as a waste of money.
Top 5 reasons why you should not go for the cheapest available option of insurance
1. It does not provide enough coverage
Though high prices are not synonymous with better quality, the opposite is usually true for cheaper insurance products that will have lower coverage and lesser benefits. Some of the cheapest car insurance plans offer only third-party liability – this does not cover for own damages or injuries to one’s own person.
2. It does not provide all the necessary benefits
The insurer might be providing very basic coverage for the kind of premium payment that is made, leaving you out of a chance to get comprehensive coverage that will secure all your needs. Being penny wise and pound foolish should never be the way to proceed as you will not have the financial aid you need when you need it the most. For example, you will not be able to avail of roadside assistance in case of a basic cover.
3. It can lead to higher deductibles
Deductibles refer to the amount that the policyholder has to pay himself or herself, in case of an unforeseen incident. It is in the form of voluntary and compulsory deductible. At the cost of reducing one’s insurance premium, he or she must not keep the deductible limit at an exorbitant level defeating the very purpose for which the insurance was first purchased. This high out-of-pocket expenditure might severely affect one’s finances.
4. It may not give you the option of making cashless claims
Insurance policies that come at a lower cost mostly allow for reimbursement claims and not cashless claims. This implies that you will have to get the car repaired and serviced in a station of your choice and then get the sum reimbursed. Not only is the process longer than a cashless claim process, but it also requires you to make a significant amount out of pocket expenditure and attend to your car and personally intend to have a network garage person/ the insurer do it for you. Just like what happened with Ankit when he availed cheap car insurance online and was unable to raise a cashless claim because his insurance company doesn't give such an option. Hence, Ankit now regrets his decision of availing the cheapest car insurance.
5. You may have to face the brunt of poor customer service
This is a huge drawback as the claims support facility might not be efficient, the handling procedures might be cumbersome, the turnover time is longer and the overall experience is distasteful.
Some tips to help you lower your premium even with a comprehensive coverage
- Compare policies online to see which insurer offers the best coverage for a reasonable price. Have a careful look at the add-ons that the company has to offer too.
- Negotiate with the car insurance company to get the insurance policy at a reasonable price. Use your impeccable no-claim history to get the policy at lower premium rates.
- One can try bundling insurance in order to reduce the premium costs.
- Try not to make any small claims for small dents and scratches as you will lose out on the No Claim Benefit and it will adversely impact your premium too during the time of renewal.
- Look out for discounts that the insurance company has to offer as it will result in a significant reduction in the premium amounts or might allow for additional add-ons at lower prices, etc.
- Opt-in for voluntary deductibles and increase its limit to reduce the premium amounts. A higher voluntary deductible limit must generally opt-in circumstances where you are an extremely safe driver and if you have not made claims for a few consecutive years.
- Complete the process online as one can avail of several offers that online insurance companies give. It will also reduce the amount of time and effort that one has to invest in purchasing the insurance policy.
- Go for long-term policies of the car, if available as it will save one from inspections, cost of renewal, renewal in premium rates, etc.
The cheapest insurance might give you some short-term satisfaction of having purchased a policy cover for your car but will not serve its purpose when you are in real need of it. The cheapest coverage might even fail to provide you the most basic of services.
Always look out for the benefits and additional coverage offered by the insurance company before opting in for the policy and not simply the cost of the insurance policy.