Insurance companies frequently advertise “low low rates ��? as if a cheap low rate is the best thing for you. However a cheap insurance package might not be the best option since the needs of everyone varies. There’s no denying that the possibility of saving money is a very strong draw for most of us but insurance for you your family and your possessions is not the right place to skrimp as the cheap insurance may come back to bite you later.
What are the advantages of cheap insurance policies? More money in your wallet in the short-term. And what are the disadvantages of cheap insurance policies?
- Less coverage
- Less peace-of-mind
- Less broker support
- Rates may rise
All of these disadvantages of cheap insurance policies have one thing in common: they cost you MORE money in the long-term.
Cheap may mean less coverage.
So you’ve done the responsible thing and purchased an insurance policy – and at a bargain price too. Imagine the shock when you need to make a claim on your insurance and you realize that your policy doesn’t cover the situation and you’ve been paying your premiums for nothing.
If you choose a cheaprenter’s(orhome orcondo) insurance plan that doesn’t cover theft but then your home is broken into you will be stuck paying out-of-pocket to replace your TV computer sound-system jewelry and anything else that might be stolen. The cheap policy will suddenly feel very expensive!
Here’s another example: if you choose acar insurancepolicy that is liability only that means all damage to your vehicle will come out of your pocket and you won’t be getting a rental vehicle until the repairs are done (or the replacement vehicle is purchased) – unless you pay for it yourself of course.
Cheap means less peace-of-mind.
Insurance should give you confidence knowing you are taken care of in any situation. 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 means less broker support.
As they say you get what you pay for. When you have cheap insurance you’re also more likely to have inadequate access to support and expertise from insurance brokers. The company offering cheap insurance needs to make up for the reduced income by reducing other benefits such as access to staff to help you. Brokers deal with difficult home auto RV and natural disaster situations every day and you need them on your team if something goes wrong. Without the advice of a broker in a time of crisis you may make the wrong and more expensive decision.
Cheap means rates may rise.
Insurance policy rates change and cheap rates have nowhere to go but up! A cheap policy might be only a cheap introductory period; then after a year or so your rates will go up but you’re still stuck with less coverage and support. Cheap rates also change due to usage and increased risk. Your cheap car insurance policy might get more expensive if you have too many speeding tickets or even get hit by another vehicle. However the policies that cost a little more may offer locked rates which don’t change even if the risk increases. Or a more generous policy may offer some “accident forgiveness ��? so that your rates won’t go up just because you got a ticket or knocked over a mailbox!
It is clear from the above that the disadvantages of cheap insurance policies far outweigh the advantages. Instead of thinking “What’s the cheapest insurance I can get?��? you should be asking about what you need and what you want in your insurance. Knowing what you don’t need will also help you keep your policy costs down.
Work with your broker who is an expert in insurance. Give them plenty of information to help them understand your unique needs and they will guide you through policy options in a range of prices and levels of coverage.
Finally consider insurancebundling. This is one option for getting discounted (cheaper) insurance without sacrificing coverage peace-of-mind and support.