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What Do You Mean My Cut-Rate Car Insurance Doesn’t Cover That?

While getting a great price on car insurance is always a bonus, be sure to read all of the fine print. Like many things in life, if a deal seems too good to be true, it probably is. When dealing with car insurance you want to make sure that you have the proper coverage and cut-rate policies will often contain surprises that you might not be aware of until you need to make a claim. While getting in an accident is never fun, adding the stress of a less than stellar insurance policy can make it even worse.

Experts advise that when comparing insurance policies shopping by price alone is a mistake. Finding a policy that offers the protection you need combined with great customer service is the best way to go.

Following are a few pitfalls that are common in low priced insurance policies:

1. Low Coverage – The best way to lower policy prices is to lower the coverage. Many cut-rate policies will only offer coverage limits that are mandated by the state the policy is being written in.  States only require liability coverage and the limits are quite low. If you are at fault in a serious accident the policy limits will not cover the expenses, meaning you will be on the hook for the excess.

If your cut-rate policy only offers liability coverage, there is no protection for your car. Collision and comprehensive cover the costs to repair your car in the event of an accident, or damage caused by fire, flood, vandalism or theft. Without this coverage you will be paying for the repairs.

2. High Deductibles – Cut-rate policies often have high deductibles which can be a great way to save money, until you need to make a claim. If you are carrying a $1000 deductible be sure that you have the money put aside, you never know when an accident will happen. A high deductible can quickly get expensive if you have more than one accident in a year.

3. Limited Coverage for Repairs – If your cut-rate policy does offer collision and comprehensive there is a good chance there will be limitations. Non-standard policies often factor in depreciation, even for repairs. As an example, if a car were hail damaged, instead of covering the full amount to repair the vehicle the policy would only pay a percentage based on the depreciated value of the car.

4. Poor Customer Service – A cheap policy is no longer cheap if you cannot get the help you need when an accident happens. Slow response times, adjusters that take forever to look at your vehicle and cheaply done repairs are just a few things you may be in store for with cheap policies. Ask friends and family for recommendations when shopping for a new policy, specifically ask them if they have made a claim and how they were treated.

5. Friends Not CoveredCheap car insurance will often exclude friends and even family members who are not listed on the policy. This can be a problem if you let friends borrow your car on a regular basis. Some of these policies will extend coverage but will drop it down to state minimums when a non-listed driver is behind the wheel, drastically reducing your protection. Since it is your car you will be on the hook if your friend gets in an accident.

Saving money on car insurance is always a good idea but be sure you know what you are getting into when it comes to cut-rate insurance.