This week I’ll discuss why a cheap rate on car insurance in California may put you at risk.
1. Low rates may ignore important facts.
We’ve all been tempted to respond to a TV or Internet ad promising the lowest rates on car insurance. Everywhere we turn, there’s a promise of a better rate.
But rates can be manipulated by ignoring certain facts.
For instance, how many miles you drive is a major factor in determining your premium. So, it can be tempting for someone who is preparing a quote to hedge on how many miles you drive each year, or how your vehicle is used day to day. Less miles usually equals lower rates. But if that lower rate is based on a misrepresentation, you could be in trouble at claim time. When you get a quote, double check the accuracy of “miles driven” and “use of vehicle.”
Another tactic that creates a lower rate is to omit certain drivers in your household. Got a 19-year-old with a bad driving record living at home? Ignoring that fact may save you money, but it can also put you at serious risk at claim time. You could lose your policy or even your assets for omitting materially important facts.
In short: Double-check that your quote is based on real facts.
2. Low rates may not provide adequate protection.
If you are shopping by price, it’s easy to ask for the “lowest rate.” That could include high deductibles, which may be fine in your situation, especially if you have adequate savings to cover those deductibles.
But a “competitive quote” may also include low liability limits, which may not be in your best interest.
Many of my Napa Valley neighbors and friends are enjoying a low auto insurance premium, but unknowingly, it’s at the expense of adequate coverage if something awful happens. This can happen because they haven’t reviewed their policies in a long time. It can also be that they were sold a “low price” with not enough liability coverage.
In short: Lower premiums are good, if they don’t endanger you at claim time.
3. Low rates may cost you quality customer service.
I think it was Benjamin Franklin who said that "the bitterness of poor quality remains long after the sweetness of low price is forgotten.”
This can apply to your auto insurance.
Not all companies provide superior customer service. This can be especially true at claim time.
The day may come when you need your insurance policy to work for you. On that day, you will care much more about quality than price. So, call a local agent today, and make sure that your policy isn’t just about price.
Bruce Sackrison is an insurance property and casualty broker affiliated with Professional Insurance Associates helping clients with insurance needs for personal, commercial and business insurance. Bruce can be reached at 707-931-0186, firstname.lastname@example.org