Shopping Auto Insurance on Price Alone: What It Can Cost

So, you saved up for years to buy a car, and now you are looking for a cheap auto insurance policy.  Whether you live in Granada Hills, Los Angeles, Northridge, Calabasas, Santa Monica, Simi Valley, Encino or Thousand Oaks you’ve worked hard to get where you are. Why take a chance by shopping for a cheap auto insurance policy that is meant to protect you and your family?

Why the lowest price rarely stays the lowest

If you own a car, truck, motorcycle or other motor vehicle in California, state law requires you to carry auto liability insurance.  In most instances, carrying the state required minimum liability auto insurance will not be sufficient.  Purchasing auto insurance based solely on price may lead to devastating results.  It’s just a shame that car owners spend so much time researching how to find an inexpensive auto insurance policy, but most do not attempt to understand the policy itself, until they need to file a claim. After you go through all of the trouble of finding an inexpensive company this year, will they still be inexpensive in subsequent years? Often, those with the lowest rates aren’t the lowest priced companies for long. Many companies don’t collect enough in premiums to sustain enough of a surplus to pay claims over an extended period of time. Instead, they have to raise rates or they might go out of business.

The details live in the policy, not the quote sheet

Some car owners compare auto insurance policies by focusing on the Declarations Page or Quote Sheet, but the devil is in the details. What you really need to do is review the entire policy or work with an agent who is knowledgeable about what is included and excluded. If you are just shopping based on price and looking for a lower priced auto insurance policy, you might want to ask what is not covered. Remember, there is no such thing as “Full Coverage,” even though “Full Coverage” is a term thrown around a lot when it comes to an auto insurance policy.  The policy worth buying is the one that covers you the way you think it does.

What will your auto policy not cover?

It is also important to note that if items in your car are stolen or damaged in an accident, they typically are not covered under your auto insurance policy. Consider reviewing your homeowners or renters policy against the value of what you routinely carry in the car in the event of an accident or burglary.

Discounts and loyalty credits you can miss

In addition, most insurance companies offer other insurance products such as homeowners insurance, renters insurance, life insurance, RV insurance, etc…. Other discount opportunities are available based on what you do for a living, such as teachers, law enforcement or engineers, and some carriers extend the same idea to a degree or a professional association. These run through group arrangements rather than as an ordinary rating factor, so which ones exist varies by carrier and there is no single list to check.  An agent will not know what you qualify for unless you say what you do.  Insurance companies often offer loyalty discounts to clients that maintain coverage with the same carrier for a prolonged period of time.  Don’t miss out on these great discounts by fleeing companies at the slightest change in your rate.  This is worth understanding properly in California, because the rule here is unusual. Persistency is one of the optional rating factors an insurer may use, so not every carrier offers a loyalty credit at all. Where one is offered, California does not let you take it with you. A carrier may not apply a persistency credit to a new policy based on the time you spent insured somewhere else. Two ballot measures sought to make the discount portable, in 2010 and again in 2012, and voters rejected both. So the years you build with one carrier stay with that carrier.  That is worth weighing against a rate increase, since the credit restarts at zero with a new carrier and takes years to rebuild. Whether staying still costs less overall is a question of the two premiums side by side.

What is really at stake

Many premier insurance company auto policies are fairly competitive when consumers are comparing auto insurance rates; however, they are often not the least expensive.  Should an unforeseen event occur where you need to use your auto insurance policy, would you really want the “cheapest” policy?  Regardless of what you are shopping for, products are priced lower for a reason. There’s a lot to lose when it comes to your motor vehicle if it is not properly insured. I suggest that you don’t make a decision based solely on price when it comes to choosing an insurance company.

Have your policy reviewed before you need it

It is advisable that you consult with a licensed insurance professional rather than purchasing insurance online, on your own.  While no one can guarantee that you will be covered for any circumstance that arise, you would be well served to take the time to allow me or someone on my staff to review your policy with you.  Believe me, you don’t want to be surprised when you have a large loss, at a time when you’re vulnerable. Give us a call today at (818) 322-4744 to set up a review of your automobile policy, or any other insurance for which you might have a need. There is no charge for my time or a rate quote. A review costs nothing and it is the only way to see what your own policy actually says.

Disclaimer

This article is provided by Schneiderman Insurance Agency for general informational purposes only. It is not legal, tax, financial, claims, or coverage advice. We are licensed insurance professionals, not attorneys, accountants, or financial advisors, and nothing here should be relied on as a substitute for advice from a qualified professional in those fields. This content is general in nature and is not a review of, or a recommendation for, any individual reader’s specific insurance needs, policies, or circumstances. Insurance coverage depends entirely on the specific terms, conditions, endorsements, exclusions, limits, underwriting eligibility, carrier, and facts of each situation, and the actual policy language always controls. We do not guarantee any coverage, pricing, eligibility, underwriting approval, or claim outcome. Reading this article does not create an agent-client relationship. To understand how these issues apply to your situation, please review your own policy and speak with a licensed insurance professional, and consult legal, tax, or financial advisors where appropriate.