Nowadays, given all the expenses that we must manage, people tend to go with the cheapest version of anything. As such, even if they desperately want a new pair of brand sneakers, they will still go on bargain websites and try to buy them.
The same happens with insurance – namely, with the troublesome yet essential car insurance. People always try to get the best deal in this case! But is it worth going cheap?
In short, would your cheap insurance cover your back if you were involved in a serious injury claim? Let’s find out!
The Importance of Insurance
First and foremost, insurance – both personal and vehicle – is meant to protect you from additional payments. This is the main reason why insurance should not be regarded as something that you can get if you go cheap.
Cheap insurance means cheap policies that could result in you having to pay your own bills or damages. Here’s exactly why cheap insurance may not be worth it:
Risks of losing future earnings and assets
As you know, there’s minimum liability coverage that drivers should always carry with them. It is meant to cover any fees, damages, or expenses that one may incur in an accident.
However, the truth is that the minimum coverage is really the minimum! Basically, it usually cannot cover serious accidents with bigger damages. For example, if your minimum coverage is $30k and you are responsible for damages worth $60k, you must cover half of those damages with your own money.
How much does it take to increase your liability coverage? Well, it takes as little as $25 a month to increase your coverage three times your current amount. In hindsight, protecting your assets and earnings is cheap.
Expensive damages caused by a cheap car
Most cheap car owners avoid taking more expensive insurance because they do not think their car is worth investing in. Moreover, some people drop certain vital policies because of a cheap car, policies that may come in handy later.
In the end, even if you are driving something worth a couple of grand, keep in mind that you could damage much more expensive vehicles. Coverage of $50k couldn’t probably pay for damages on a Lamborghini.
You may not afford the $10k to buy yourself a new car, but you can chip in an extra $100 to increase your cheap car’s coverage.
Dropping essential coverages
One essential part of any car insurance is the uninsured motorist coverage. With it, you are still covered if you get in an accident with a person that is not insured. Strangely enough, it is a coverage that most people drop.
Even if a court finds the other person responsible, they may have such financial challenges that they cannot afford to pay your medical bills and damages. And you can avoid relying on your own savings by opting for this particular type of coverage.
The Bottom Line
If someone wants it, they can go cheap when it comes to insurance. However, for $1-$200 extra every single month, they will not have to raid their savings account if they damage a more expensive car or get in an accident with an uninsured person.
Thousands of dollars can be saved with the help of a small investment in your insurance policies and coverage. We are not saying that you should buy all of them – just avoid going dirt cheap and protect your finances!