Choosing the lowest rate car insurance may not be the best plan

By Higginbotham on April 08 , 2020

car wreck

We’re all flooded daily with car insurance commercials claiming that shopping with them will get you the lowest insurance premiums of any insurer out there. Saving money on your insurance is important, but the lowest insurance premiums are usually accompanied by the lowest insurance coverage. 

Determining what types and how much car insurance coverage you need is something that only a qualified local insurance agent can help you decide. An independent agent is more concerned that you have adequate coverage than simply giving you the cheapest premiums. For instance, do these coverage types make sense for your personal needs? 

  • Collision Coverage: protection for your car from damage whether you’re at-fault or not. Premiums weigh heavily on the value of your vehicle. 
  • Comprehensive Coverage: pays for damage to your vehicle from things like contact with an animal, fire, theft or vandalism. 

  • Medical Payments: commonly known as MedPay or PIP, this covers medical bills as a direct results of an accident, regardless of fault. 

  • Uninsured Motorist: coverage if you’re involved in an accident with an uninsured driver and the other driver is at fault. Both physical damage (your car) and bodily injury are offered. 

  • Underinsured Motorist: coverage to help fill the gap from a motorist who has insurance, but not enough to cover the loss, in instances when the other driver is at fault. 

When deciding on what coverage options you need, think about these scenarios: 

Scenario 1: You purchase a low cost, low coverage liability policy with only $25,000 for property damage. You rear-end a new, two-week-old car, totaling the vehicle. The car’s replacement cost is $35,000. You have to pay $10,000 out of pocket. 

Scenario 2: You are t-boned by an uninsured motorist and have extensive medical bills in excess of $50,000. You don’t have uninsured motorist coverage or personal health insurance, and if your medical payments coverage only provides for the first $10,000, you have to take the uninsured driver to court to pay the difference. In the meantime, you’re responsible for the $40,000 in bills. 

Regardless of whether you’re shopping for a new auto, home, boat or motorcycle insurance policy, if you opt for the lowest insurance premiums, you should be aware that you’re usually lowering the amount of insurance coverage you have. Depending on your situation, this may not be a wise decision because it puts your financial future at risk by carrying low limits.  

Want to talk about your options with an agent? Contact Higginbotham’s personal insurance experts. 

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Tags: Home & Auto


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