What Companies Won’t Tell You About Low Cost Liability Auto Insurance

The bills that come with owning a vehicle can quickly pile up, and if money’s tight, you may be thinking about cutting some corners on your car insurance. However, before you do, it’s important to know what some companies might not tell you about cheap liability auto insurance.

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The insurance industry is a very competitive one, and as a result, there are plenty of businesses out there offering low-cost coverage as a way to entice customers. While some cheap liability car insurance policies may be right for your budget and needs, remember that cheaper often isn’t better. Get up to speed about low-cost liability insurance by reading these tips.

Liability Auto Insurance

Drivers in most states are required by law to have liability auto insurance for good reason: it helps pay for the damage a person causes in an accident. If you’ve been involved in a car crash, you may know just how costly the medical bills and repairs can be. A serious car accident can produce thousands of dollars in damage.

How much liability insurance you’re required to have varies on what state you live in. Insurance companies are obligated by law to inform you what the requirements are. You can also find out for yourself by contacting the government department in your state, which oversees the region’s car insurance regulations.

For example, if you live in Florida, you can find out more by consulting the Department of Highway Safety and Motor Vehicles. Its website provides a glossary on common insurance terms and provides better understanding for the things companies often don’t divulge on their own. However, in Missouri, you should reach out to the Department of Revenue for this same kind of information, which also provides state-specific guidelines.

Two types of liability car insurance that you can buy include one that pays for property damage and one that covers bodily injuries. For example, property liability insurance will help pay for repairs that another person’s car needs if you’re responsible for the crash. Bodily injury insurance will provide compensation for another person’s medical bills.

Just like other types of insurance policies, the more liability car insurance you buy, the more damage and bills will be covered. For example, you could elect to purchase a policy that would pay up to $60,000 toward a person’s injuries and a maximum of $120,000 for anyone hurt in an accident. You could also buy a policy that will cover $60,000 worth of property damage.

Typically, liability auto insurance policies are written listing the maximum personal injury amount that is available for an individual, the entire accident, and then any property damage. For example, the liability insurance policy described above would be listed as 60/120/60.

Not only are most drivers legally required to buy liability auto insurance, but also it’s one of the more important insurance policies you will buy.

As a result, before you jump at low-cost policies and what might appear to be great savings, be certain you know exactly what you’re purchasing. Understanding the basics can go a long way in your search for reasonable rates.

Lack of Coverage

Low-cost liability insurance may sound like a great way to save money for a new car or the kid’s college fund, but it’s important to ask why it is so cheap. What the provider may not be telling you directly is that the policy provides very little coverage. In other words, if you cause a serious accident, you could be financially devastated.

While providers have to tell you what the minimum insurance requirements are in your state, most experts will tell you that if you can afford it, you should buy more coverage.

For example, if you’re responsible for a crash that produces damage in excess of what your policy covers, you could be sued for more compensation. Remember that car accidents can cause long-term injuries that may require months of medical attention and rehabilitation.

The more coverage your policy provides, the higher your insurance rates have to be. As a result, low-cost liability auto insurance often provides only the minimum level of coverage. Trying to save a few dollars now may not be worth the financial risk.

It’s important to remember that liability auto insurance does not pay for repairs your car needs if you cause an accident.

If you drive a new or valuable vehicle, you may want to think about buying collision insurance. Repairing cars can get pricey. Alternatively, if you really want a new car, there are vehicles that cost carriers less to cover. You also may want to consider comprehensive insurance, which will pay for damage not caused by a car accident, like a hailstorm or break-in.

Many state governments provide information about the various types of insurance. For example, the Office of the Insurance Commissioner in Washington State provides resources about the different types of coverage you can get for your car, and it goes beyond the basics. For instance, will you be covered if you pull a trailer? Do you need more protection if you rent a vehicle? The answers are here.

You Can Adjust Your Coverage

If you’re thinking about buying cheap liability car insurance, it’s also good to know that you can adjust your coverage. In other words, you may be able save money on your liability insurance, through buying more of one type of coverage than the other.

If you live in a remote and quiet area, and hardly drive at all, you may not need as much property damage insurance as someone who lives in a big city.

In this case, the likelihood of causing an accident that causes thousands of dollars in property damage is lower. In this situation, you may decide to take your savings and put it toward having a good amount of bodily injury insurance.

This is a good way to cut costs on your liability insurance and be smart about it at the same time. However, a provider may try to get you to buy a certain level of coverage across the board and not explain your options. Remember, if you drive often and are in heavy traffic, having plenty of liability insurance is always a good idea.

Provider’s Financial Health

A company that offers you cheap auto insurance may be doing so because they’re on the ropes. While many well established providers also offer great deals on car insurance, companies that aren’t on solid financial ground are desperate for business. Selling insurance at low prices is one way for them to make sales.

While it may seem like a great way to save some cash, you want to know that the provider will be there when you need them. Often, car accidents result in stressful times, and you don’t need to worry about whether your provider might have difficulties covering the claim. A company that’s in financial trouble isn’t going to offer that information voluntarily.

You can find out more about a provider’s financial health by referring to various ratings institutions. For example, A.M. Best provides financial information and credit ratings about different carriers. On it’s site, you can find reports on property and casualty insurance companies.

Poor Customer Service

A company may sell liability car insurance at low prices, but consider whether they can provide the level of customer service that you expect. If you can’t get someone on the phone when you have questions, you could regret buying cheap insurance. Alternatively, if their staff is constantly making errors or can’t answer your questions, you should switch providers.

A company selling too-cheap liability insurance may not have the resources it needs to provide good customer service.

Before you buy anything, do a quick search online to see if there are any reviews about the company and its credibility.

Is the Company Legit?

As the old saying goes, if it sounds too good to be true, it probably is. Simply put, a company that’s offering really low-cost liability auto insurance could be a scam. Particularly when times are tough, criminals will try to take advantage of people who are desperately trying to save a few bucks.

Before you buy very cheap coverage, be sure to do some research online and make sure the company has a good reputation. For example, the Better Business Bureau is a free resource that gives background information on the company, complaints it’s received and whether those complaints were resolved.

Hidden Fees

A company may not tell you that the reason their liability insurance is so cheap is because once you’ve signed on, hidden fees start kicking in. If you’re considering low-cost coverage, read the fine print to see if the company charges any administrative fees. It’s also a good idea to see what their late payment charges are and whether they charge customers extra to pay monthly.

While each fee may not sound like much, if a company uses them regularly, over time, they could really add up. Your low-cost insurance may not end up being so cheap after all!

Shop Around

One of the best ways to protect yourself and find the best deal possible is to shop around. If you come across a cheap offer, take a few minutes to see if another company can match or beat the price. Then, do a little homework to see which company has favorable reviews and is well established.

A great and convenient way to shop for affordable coverage is to use a website that specializes in comparing insurance rates. All you have to do is answer a few questions about your driving circumstances and the site will send you quotes from several providers. The best deals come to you!

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