The Risks of Discount Auto Insurance
Every state requires car insurance, but few if any have done anything about the rising costs. That means that even well-meaning drivers are looking for the best rates possible. Especially those of us on tight budgets, like students, the retired, the under employed. But does “legal” necessarily mean “safe” or “good”? Does “discount” mean with car insurance what it means for things like cereal: the same but on sale? Or does “discount” for car insurance mean “cheap” - as in lower quality as well as price?
The brass tacks of it, folks, is that we get what we pay for. And in a service industry like car insurance, where claims and payments are a big part of a time-consuming process, “discount,” “cheap,” and the like often equates to poor or slow service, declined claims, and very slow repair check disbursements.
Imagine it: You have done your best to stay legal, to stay protected with all the auto insurance you can reasonably afford, which isn’t much. Then one day, you’re driving along and your attention slips for just an instant. BAM! You’ve sideswiped a car. Your car wasn’t in the best shape to begin with, so the loss of the passenger’s side view mirror isn’t such a big thing. But the Audi that you clipped? It went from awesome to ugly in a heartbeat. It was your fault, right? You’re a stand-up person, so you exchange insurance information. The look on his face says he’s never heard of your cheap insurance company - or he has and it isn’t good. Question: What comes next for you? Will they give this guy the runaround so he’ll have to come calling? Will he give up dealing with your discounted claim services and call his lawyer instead?
It’s now that you’re thinking, maybe cheaper isn’t better.
Cheap Car Insurance Can Be Risky Business
States mandate that you have to have car insurance, but sadly, none mandate how fast an insurance company has to act on a claim or send out a check for repairs. If you have to wait weeks for a claim to be done, the auto insurance company is well within their legal rights. They have to follow the law; they don’t have to follow good customer service practices.
And that’s one of the ways that cheap insurance can stay cheap. Other ways include:
- Doing the bare minimum:
Budget car insurance companies will offer the very basics, the bare minimum of legal requirements. Oh, you’re coverage is legal and if you’re pulled over you won’t be ticketed or lose your right to drive, but if you think you’re getting the same coverage as someone who is paying a premium with one of the top insurance companies? Think again. - Watch out for the biggest gotchas - add-on options:
State minimum liability is the cheap insurance company’s stock and trade. So, if you decide you’d like some of the extras, to protect your savings and so on, things like windshield replacement coverage? Or maybe your a woman who thinks roadside assistance might be a good safety feature to have? Get ready to see your premiums shoot skyward. You will likely see a bigger jump in rates with a budget auto insurance company than with one of the big boys. - Cheap prices means cheap service:
The big boys devote themselves to good service and they fight to find ways to provide something that is a cut above their competitor’s cadre of claims services. But the cheap guys? They staff with inexperienced people and with a skeleton crew. You’re getting the bare minimum at a bare-bones price. The service is on that level too. - Reliance on automated customer service:
Don’t like talking to a computer? Well, get used to it. And get used to navigating through the if-then statements and endless listings of a computerized answering service. And some even use computers to generate answers to your very specific, human needs. There is no gray area in communicating with a computer, even if her voice sounds like the nicest customer service agent you’d ever want to meet. Her brain is programmed to do one thing: process information as efficiently and as inexpensively as possible. They are prone to error and because they are the first line of defense at the insurance company, the are the first line of frustration.
Well, that’s just the tip of the iceberg with cheap auto insurance companies. If you can’t afford the better service and claims processing of the more reputable auto insurance companies, you have our sympathies. But if there is another place to cut your budget, we recommend you do it. And do it before you get back behind the wheel.