The idea of cheap auto insurance sounds great. After all, who wants to pay a lot for their auto insurance? But unfortunately, in the world of auto insurance, you ultimately get what you pay for. The less you pay in insurance premiums directly correlates to the amount of coverage you will receive from your insurance carrier at the time of a loss. Rather than purchase the cheapest insurance, your best bet is to actually purchase coverage at a level that will protect your families assets.
If you went to your local insurance broker and told them you waned the cheapest insurance policy, they would likely sell you what is called a “Liability Only” policy. With this policy, you would be considered insured, as it does meet the state requirement for insurance coverage. However, most people do not actually realize what Liability coverage pays for. Liability coverage only pays for property damage or bodily injuries to others you become liable for because of a car accident. It provides no coverage for your vehicle damages or your medical bills, which will have to be paid out of your own pocket.
Some people chose to carry Liability Only coverage because they do not anticipate causing an accident and believe that if somebody else is at fault, that person’s insurance carrier will compensate them for their vehicle damages and medical bills. Which, in theory, is correct, but in reality, is flawed. What happens if the at fault party does not have insurance? Or if the insurance carrier for the other partiy denies responsibility for the accident and does not compensate you for your damages and injuries. If you do not carry coverage of your own for the damages or injuries, your only recourse at that point is to take the matter to small claims court.
Another serious problem in purchasing the cheapest auto insurance is the risk of your liability exposure exceeding your limit of coverage for Property Damage and Bodily Injury under your auto insurance policy. For example, in the State of California, you are only required to carry $5,000 in Property Damage coverage. If you purchase a policy with this coverage, what happens if you cause a collision and total out the other vehicle or you collide with two vehicles. That $5000 does not go very far and you could be held personally responsible for any amount in excess of your policy coverage. Same goes for injuries. The State of California only requires you to carry $15,000 per person with a maximum of $30,000 per incident. This does not go very far if you cause a collision and fatally injure somebody or injure someone to the point they need continued medical treatment or a surgery. Again, you could be held responsible for any amount in excess of the policy coverage. If the excess exposure is large enough, you run the risk of losing your house and your assets.
Although insurance is expensive, it is best to go with coverage that actually will protect you in the case of an accident. Look for coverage that minimizes your out of pocket expenses and limits your excess coverage exposures. When purchasing insurance, be sure to keep your family, your home, and your assets in mind. You never know what could happen out on the road, and by the time you have an accident you can only fall back on the insurance your purchased. Hopefully, it was not the cheapest auto insurance policy.