Cheap Car Insurance Rates Too Good to Be True?

car insurance rates

By comparing car insurance rates, drivers can get the best deal available, but they can also be getting a lot less than they think. Insurance companies can make policies look more enticing by offering incredibly cheap car insurance rates with hidden coverage gaps or added fees.

Before moving forward with buying coverage, drivers who receive car insurance rates that seem too good to be true should look out for a few policy deal breakers.

Coverage Reductions Found Among Some Low Car Insurance Rates Policies

When that jaw-dropping car insurance quote comes in, drivers should check the policy’s terms carefully. Look for excluded drivers, especially for those with a young driver in the household, as it’s generally cheaper to add a young driver to a policy rather than obtain separate coverage.

Policyholders may also see what’s called a step-down provision. This drops the available policy limits to state-mandated minimums for drivers who are not listed on the policy. Another provision could exclude coverage for punitive damages in a lawsuit stemming from an accident.

Certain policies only cash value insurance on car repairs instead of the replacement cost for parts and labor, something other policies only require in the case of a total loss. Provisions like this are legal in some states.

[relatedposts]Finally, coverage reduction can entail the loss of special policy benefits under lower car insurance rates, such as accident forgiveness which may have been a basic benefit offered by an insurance company under typical circumstances.

Pay-As-You-Drive Programs May Incur Hidden Fees

A new insurance product to hit the market in the last few years are Pay-as-You-Drive (PAYD) car insurance. The company provides a telematics device that measures driver performance and habits, saving good policyholders a lot of money. But what many customers may not realize is that companies often charge additional fees for the telematics devices and even make drivers pay to transmit data from the device to the company. By keeping these charges separate, the company is able to make car insurance rates look lower than they really are.

A legitimate cheap car insurance policy won’t skimp on coverage or charge hidden fees, like the ones stated above. But unless customers take the time to double-check, they’ll never know if they could be saving more money.