Lowest Price on Car Insurance vs. Name Your Price on Car Insurance

Everyone is looking for the lowest price on car insurance. That is a given. Sadly, there are times where allowing the consumer to say “no, I want a lower price on car insurance” is a real mistake. Why? Because it comes at the cost of coverage. This benefits the car insurance company because they are on the hook for less and you feel good with an extra $22 a year in your pocket. What you don’t realize is that you just cut the amount of liability insurance you carry in half. You might say “so what!” Well, let’s use an example that makes sense:

• If you look at your current car insurance policy, you will see a line item- usally the first one – titled “Bodily Injury Liability”. In laymans terms, when you are sued by the other driver for injuries incurred in the accident, this is the first line your attorney will look at. Every coverage has a limit and this is an important one. Let’s say that you currently pay $112 a year per car for this coverage and for argument’s sake, let’s say the coverge is commonly referred to as 100/300. That means that you’re covered for up to one hundred thousand per person and three hundred thousand per accident in liability. What is liability? That’s your responsibility in the accident. Now none of this is insurance advice or legal advice. It’s an explanationt that should help you see how you’re shooting yourself in the foot by naming your own price. Back to the example… By naming your own price – which saved you $22 – you now have 50/100 coverage. That’s a hell of a lot less coverage for $22!
• What are the possible outcomes? 1- nothing ever happens and you save $22 per year. 2- you have an accident and now have half the coverage you used to per-person and 1/3 per accident. For $22!  3- you have an accident and the other party is awarded $350,000. Well, you only have $50,000 per person so that’s all the policy will pay. What now? Have you ever heard of a lien on a house? If you own one, that’s a possibility. Consider all this please when you get your next quote.
• What should you do with this information? Make a careful comparison of the coverages lost every time the price drops. Cheap car insurance is great and we should all pay the minimum possible FOR THE RIGHT COVERAGE! This isn’t expedia and it won’t be a funny story should you be caught short because they let you pick the coverage. Would your doctor let you choose the anaesthesia? Would your dentist let you decide how much novacaine your syringe should have based on cost? No way!

Choice is great, but only if you understand fully what is being lost when the decision is made.