Car Wrecks: Dangers of Cheap Auto Insurance

I was scrolling through Yahoo News the other day and a story about the Hidden Dangers of Cheap Auto Insurance caught my eye.

The dangers listed are:

1. 1. You’re probably not getting the coverage you need.
2. 2. Your low-priced deductible could lead to higher costs.
3. 3. Bad customer service is bad, even if your policy is cheap.
4. 4. Friends may not be covered by a cheap policy.
5. 5. You need to watch out for cheap insurance scams.

I see a couple of these issues on a daily basis.  The most common complaint I have falls under item #1 — you might not have the coverage you need.   If you are a regular reader of my website, you know that I’m a strong believer in purchasing personal injury protection and uninsured/underinsured motorist coverage as part of your own auto insurance.  These coverages protect you from other drivers.  You spend a lot of money protecting others with your liability policy; don’t get cheap when it’s time to protect you and your family.  Spend the few extra dollars to purchase PIP and UM/UIM coverage.

I also see danger #3 arise.  Obviously, if you’re making a claim on your policy, you want the insurance company to treat you fairly.  But if you get in an accident, you want the insurance company to treat the other party fairly also.  After all, if you cause a wreck and your insurance company doesn’t treat the other party fairly, you’re the one who is going to be sued and forced to participate in the case, which may include being asked to participate in discovery, give a deposition, and even attend a trial.  It’s much easier to make sure you have a reputable company that’s going to treat all involved fairly.

A more prominent and problematic danger is danger #4.  In the past, insurance policies covered anyone who drove your car unless that person was specifically excluded under the policy.  That means that if a friend or family member borrowed your car and was in a wreck, the insurance company would cover the wreck as long as the person was not specifically excluded from the policy.  It was very rare to have a person excluded.

But now, many low-cost Texas insurance companies are writing policies that exclude a number of people, or worse,  only provide coverage for drivers who are specifically identified on the policy.  This may result in a cheaper policy, but it also greatly reduces the protection that you’re supposed to be getting with insurance.

Don’t be a victim of one of these dangers when you purchase your auto insurance.  Make sure that you’re informed and that you’re getting the coverage that protects you and your loved ones.