The High Costs of Cheap Insurance Policies

Be aware of ads promising the cheapest insurance quotes. Cutting corners on coverage might seem like a smart move financially, but it can lead to issues when you need to make a claim.

At Goosehead Insurance, our agents and customer service representatives speak one-on-one with our clients to help them navigate insurance questions and claims. We see it all—especially the repercussions of settling for cheap insurance. As consumers, we buy insurance and hope for the best, but when we actually have to use it, what does choosing cheap insurance truly cost us?

Here are the top three reasons why opting for a lower price could end up costing you more in the long run:

You risk inadequate coverage when you need it.

One of the most frequent scenarios we talk with clients about are the “what ifs.” What if something happens to your car or house? Can you say with certainty that you’re covered the way you should be?

The easiest way to decrease the cost of your premium is to make cuts to your coverage. However, this can leave you vulnerable because you risk not having the right limits for your personal circumstances.

A common situation we help our clients through is shopping around for policies and comparing rates. One policy is usually cheaper than another because it’s cut down to the most basic coverage. For example, we may recommend a policy for a client that has car rental coverage set at $60 per day. The competitor’s quote still has car rental coverage, but it is for $25 per day. In my experience, the rate for a minivan rental for a family of five is usually higher than $25 per day. Therefore, that client would be left paying the difference to cover the cost of their rental while their vehicle gets repaired.

We always advise our clients to speak to their insurance agents and customer service representatives about the best coverage for their lifestyle. You may choose a lower premium with double the deductible, but in the event of a loss, you’re not coming out on top. Your agent will help you weigh the pros and cons of these choices, so if something does happen, you’re not surprised.

You’re more likely to have a poor claim(s) experience.

When you have a catastrophic loss, the last thing you want to worry about is managing your claim(s). We often hear horror stories about terrible claims experiences with companies that place little to no resources behind customer service. Your low monthly rate is worth nothing if a tornado tears your roof off and your insurance company can’t replace it in a timely manner or at all.

We always speak to our clients about the importance of partnering with an A-rated insurance company. Their prices might be a little higher, but their expertise in providing an extraordinary claims experience is unmatched.

You may miss important coverage(s) altogether.

Cheaper policies often come with exclusions that could leave you exposed in critical situations. Sacrificing coverage for your car or home could leave you financially liable in case of an accident or lawsuit.

For example, if you choose a cheap car insurance policy, you could be foregoing coverage like uninsured/underinsured motorist insurance. This means you’re accepting that every time you get behind the wheel, you might get into an accident with another driver who is not insured and can’t pay for damages.