Hidden Consequences of Cheap Insurance

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Hidden Consequences of Cheap Insurance

via FIQ Car Blog by Mitch on 11/14/11

 claims car insurance

While it may be tempting to cut back on insurance coverage during hard economic times, owning cheap insurance can potentially have a negative impact on your financial standing. Before you make cuts to your insurance policy, it is best to consider the impact these cuts can have on your life.
As you consider purchasing cheaper insurance, pay attention to the amount of coverage the policy provides. In many cases, paying less for your insurance policy means you get less in return. For instance,  a cheap insurance policy may not cover theft, major collisions or other occurrences, which would generally require insurance. Even if you feel like you are a good driver and aren't likely to get in an accident, you aren't always the one at fault.
The cheaper your insurance policy, the higher your deductible will be, which can be a problem if you need to use the policy. When you aren't paying enough for the coverage you have, the insurance company needs to protect itself from paying out more than you put in. Therefore, they raise the amount of money you need to contribute when you file a claim. If you need to file a claim, you may not be able to afford the higher deductible. It is necessary that you weigh the pros and cons of paying more upfront or paying a larger deductible in the future.
When you pay less for your insurance, you can also expect your service to suffer. If a company can afford to charge less for insurance coverage, they likely either hire fewer adjusters or pay them less. In either case, it may take longer to resolve a claim and you may not receive the best service from the employees with which you must deal when filing a claim.
A final word of caution when considering the purchase of cheaper insurance is regarding the legitimacy of the company. While some good companies are able to offer lower rates to customers, those that promise big returns for a low cost are more likely to be out to scam you. The last thing you need is to file a claim with your insurance company only to find that the company no longer exists or won't answer you. Always check a company out thoroughly before buying a policy.

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