Summit Insurance Advisors
by Michael Harbron on Jul 03, 2019
If you’re looking to save money on your Phoenix auto insurance policy, you might be considering what’s known as cut-rate insurance. These low-cost policies may help you lower your monthly premiums, but they usually come with less accident coverage. If you’re thinking of switching over to one of these policies, learn more about the long-term costs of cut-rate insurance and how to avoid gaps in coverage.
Lowering Your Premiums with Less Coverage
When it comes to auto insurance, generally speaking, the higher the monthly premium, the more coverage the policy provides. If you’re looking to lower your monthly premiums, cut-rate insurance policies usually offer some of the lowest premiums on the market. But these policies generally come with less coverage. If you get into an accident, you may have to cover more of the repair costs out of pocket, which may cost you more money in the long run.
Saving Money Now May Cost You in the Future
If you decide to switch over to a cut-rate insurance policy, you may notice several changes to your coverage. Before switching over, it’s best to compare your old policy to the new one to make sure you won’t have to pay more if you get into an automobile accident.
You may notice the cut-rate policy outright reduces your coverage. For example, your old policy may have had liability coverage and collision coverage, but the cut-rate policy only offers liability coverage. This means the new policy will only cover repairs for the other driver’s car and you’ll need to pay out of pocket for any damage to your vehicle.
You may also notice the cut-rate policy comes with a higher deductible, or the amount of money you have to spend out of pocket before the insurance company will cover the cost of repairs. For example, if the cut-rate policy has a $1,000 deductible, while your old policy came with a $200 deductible, you’ll need to pay $800 more out of pocket before the company will pay for the rest of the repairs. This may cost you more in the long run, despite the money you saved on your premiums in the months leading up to the accident.
Ask Questions Before Switching to a New Policy
You should also research the insurance provider before switching over to a new policy. Ask these questions to learn more about how the company will handle the repairs if you get into an accident:
Will the company repair your vehicle with new or used parts?
If the company will only pay for used parts, your vehicle may need to be repaired sooner rather than later, costing you more in the long run.
Will the company only pay for services at certain body shops?
Some insurance companies only cover repairs performed at certain body shops. If you’d rather use your preferred body shop or one closer to home, consider finding an insurance provider that pays for repairs at any body shop.
Will the company pay for the full replacement cost of your car or just the depreciated value?
If you total your car, the insurance company may only pay for the depreciated value of the car, or what it was worth when it crashed, instead of the full replacement cost. This will leave you with less money to buy a new car after the accident.
Will the company cover the cost of a rental car while your car is being repaired?
If you still need access to a car while your car is being repaired, look for an insurance provider that covers the cost of a rental car. Otherwise, you’ll need to pay for the rental car out of pocket.
Keep these questions and concerns in mind as you consider switching over to a cut-rate policy. While these policies will lower your monthly premiums, you may end up paying more over time.
If you’re looking to save money on your next policy, visit Summit Insurance AZ for affordable Phoenix auto insurance.
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