Have you ever heard the phrase “you get what you pay for?” Well, when it comes to insurance that saying may just be flipped on its head. While getting cheap car insurance may seem more cost-effective, the fact that cheap policies offer extremely limited coverage can actually lead to higher overall costs in the long run.
Daily Finance reported on hidden costs for inexpensive insurance in 2012, and the issues continue to ring true even now. With “snapshot” insurance programs on the rise, promising lower insurance rates for so-called “good behavior,” this also results in other drivers paying more through no fault of their own. Fighting tooth and nail to get the cheapest insurance may not necessarily help you get the coverage you need, especially considering the terms and conditions of low-cost policies.
Some of the actions that can raise your insurance rates with “snapshot” insurance plans:
- Braking too quickly. That’s right, if you slow down by more than about seven miles per hour, you could see an increase in your insurance rates rather than the promised decrease.
- Driving too much. If you happen to drive more than about 30 miles per day, say goodbye to those coverage discounts.
- Driving too long. The less time you’re on the road, the less you’re going to pay for your insurance—but it’s people who are on the road more often that require the extra coverage, making this requirement patently ridiculous.
Beyond these three features, you can also end up paying more for your insurance and because of your insurance if you opt for a low-cost plan specifically because you opted for something that cost less right out of the gate. Low-cost plans offer limited coverage, so if you get in an accident the likelihood of your injuries and damages being covered is minimal at best. This means you’ll be paying more out of pocket, while also continuing to pay monthly fees on insurance that doesn’t actually do anything for you in the event of an accident.
Since cheaper insurance plans cover very little, the cost per coverage aspect is significantly higher than more expensive full-coverage plans. Spending $100 per month for basic coverage on glass and liability means each aspect is $50 apiece; contrarily, paying $200 per month for full-coverage insurance means that each portion of that coverage costs a fraction of the costs applied in your cheap insurance plan.
Investopedia has a few simple tips on keeping your insurance costs low while still getting full coverage, regardless of your budget. In Florida, minimum coverage requirements for personal injury protection (PIP) and property damage at both $10 thousand, so make sure that the coverage you’re looking at meets your state requirements. Comparison shopping is always a great idea, as well as talking to insurance agents in-person to see what they can offer you in the way of benefits and discounts depending on your current driving record, type of car and other characteristics of your particular situation.
When you’re ready to buy new car insurance, remember that paying less will almost always actually mean paying more. Shelling out a little extra cash once a month is worth it to be sure you’re fully protected, so do your research and hash out your budget with the insurance agent before you sign up.