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Cheap car insurance can sometimes be the wrong choice

It's always nice to save money, especially on those recurring payments every month like car insurance. But getting the cheapest policy out there isn't always the best solution for your family.

Property damage and hospital bills after an accident can add up very quickly, and if you don't have enough coverage, YOU could be stuck with paying the difference between what insurance will pay and the total costs.

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Car insurance needs to be an intentional purchase based on where you are as an individual, a family, or a business. It's important to shop around to get the best value, meaning the optimal coverage and customer service that your budget allows.

We advise you to research the amount of car insurance required by your state. In Tennessee, drivers are required to purchase bodily injury and property damage liability insurance at a minimum of 25/50/15. This means insurance will cover damage that your car causes up to $25,000 bodily injury for each individual, $50,000 bodily injury total, and $15,000 property damage liability per accident. Although liability does cover damage caused by your car, it does not cover damage to you or your car. These expenses will rest on your shoulders.

The cheapest policies will also have a high deductible. For example, if you are in an accident and the damages are $2,000 and your deductible is $1,000, you will be responsible for paying $1,000 toward repairs. A more expensive policy might have a deductible of $500, but will save you $500 in upfront payments should you get into an accident.

The bottom line is that there are many coverage options, and the cheapest is not always the best solution, especially considering most of us don't have thousands of dollars on hand in case we are injured in an accident.

Here are a few reasons why the cheapest car insurance might be the wrong choice:

  1. Simple liability coverage won't cover damages to you or your car when you are at fault. An accident could ruin you financially if you can't afford the medical bills post-accident for you and your family. It might be in your best interest to increase your coverage to include collision and comprehensive coverage so that YOU are protected as well.

  2. Is the deductible manageable? An inexpensive policy may have a high deductible. Make sure you have the cash on-hand to cover it. If not, consider lowering your deductible.

  3. Will the policy cover uninsured or underinsured motorists? We live in a country where not everyone - although required - will buy car insurance. And if a driver is underinsured (meaning they have insurance, but they don't have adequate coverage), you may be stuck with thousands in bills because their insurance payments have been maxed out. Read your coverage carefully to make sure you are covered in the event of an accident with an uninsured driver, and consider including this coverage in your policy if it doesn't.

  4. Will you receive great customer service when an accident happens? Customer service is important. The company you choose should be prompt in handling your claim and easy to work with. Sometimes the cheapest companies are not either of those. Read reviews from current customers to get an idea of how the customer service is.

Although car insurance is a necessity, put the time into researching the best company and policy for you, your family, and your business. You may find that adding coverage beyond just liability is the smarter option.

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