If you’re shopping for insurance, you’ll frequently see advertisements offering low rates – as if the cheapest insurance premium is the best thing for you. However, the lowest priced insurance may not be the best choice for your individual situation. While saving money is a strong draw for most people, insurance helps protect you financially over the long term and allows you to recover from a major disaster. It’s important to ensure you have the right coverage at the best possible price rather than the cheapest insurance without regard to protection.
Advantages of Going with the Cheapest Insurance
There are some obvious advantages of going with the cheapest insurance: you’ll save money! Sometimes, the cheapest insurance does offer adequate coverage for your needs. You may also have a great experience with the insurer and/or broker and get exactly what you want when it comes to price, protection and service.
Disadvantages of Going with the Cheapest Insurance
There are potential disadvantages of choosing the cheapest insurance policies, including:
- Less coverage
- Less peace-of-mind
- Less broker support
- Rates may rise
The important thing is to understand the coverage.
Before choosing an insurance policy, you should understand what’s covered and what isn’t. It is also beneficial to compare your quotes not only for the price but for coverage and service. This can take a lot of work, but if you have a broker, they’ll be able to help you compare.
For example, if you’re looking for home insurance and get 5 different quotes. They all include comprehensive home insurance, but one doesn’t offer overland water coverage – protection you want for your home. Even though that was the cheapest option, it was the cheapest because it offered the least amount of protection. That option is eliminated you end up going with the second cheapest option as it has all the coverage you want and provides decent claims service.
It’s important to check coverage as well as policy limits to ensure you have the right type and amount of protection.
Cheap can mean less peace of mind.
Insurance should give you confidence, as you know you are taken care of, should an unexpected disaster strike. However, cheap policies with less coverage simply don’t take as good care of you. You’re paying for insurance but you will still worry about all the scenarios you are not covered for. What’s the point of insurance if it steals your peace of mind rather than give you peace of mind?
Cheap can mean less broker support.
As they say, you get what you pay for. It’s important to check reviews for the broker and insurance provider as you may have inadequate access to support and expertise. This can show up when you are only provided with a quote from a single insurance company or there is a lack of prompt response or answers to your questions.
Cheap premiums mean rates may rise.
Often, insurance companies will offer lower rates for new business. A cheap policy may only be cheap for an introductory period and then your rates will increase. You may find incentives such as accident forgiveness are not offered on cheaper policies, which can cost you in the long-term if you have a claim.
The important takeaway from this is that you should review more than the price of an insurance quote before you choose a policy. You should be reviewing your coverage and ensuring you have the best protection possible for the price.
Your broker can get you quotes from different insurance companies while ensuring you have the correct coverage for your situation. They can advise which insurer is the best choice.