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Reasons Why Buying the Lowest-Priced Car Insurance May Not Be a Good Idea

Written by Sharad Bajaj
Updated On Oct 15, 20232 min read
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Reasons Why Buying the Lowest-Priced Car Insurance May Not Be a Good Idea

Everybody is trying to save their hard-earned money. Instead of opting for the most expensive alternative, to save money, most of us choose to purchase items at a reasonable price. But for a car insurance policy, this idea does not apply. As per car insurance experts, it is not a smart idea to purchase the lowest-priced car insurance policy on your car. This will arise because not all car insurance policies come with the same amount of coverage or incentives and you could be stripped of certain key benefits due to a lower-priced car insurance policy.

5 Reasons Why Buying the Lowest-Priced Car Insurance May Not Be the Best

Let us take a look at some of the reasons why you should not buy the lowest-priced car insurance for your car

  • It Impacts Policy Coverage: The cost of a car insurance premium is primarily decided by its coverage. Lower car insurance premiums typically imply lower coverage. An inexpensive car insurance policy is affordable only since it provides basic coverage i.e., third-party Car insurance. As third-party policy compensates only third-party risks, if any accident leads to loss or damages to your vehicle, you may suffer substantial financial losses. Only with a comprehensive car insurance policy that comes with a higher premium, you will be able to get full coverage for your car
  • May Not Offer Essential Benefits: A car insurance plan is a blend of coverage and essential benefits. Lower-priced car insurance plans have fewer advantages. By decreasing coverage benefits, the insurers lower the car insurance premium. If you do not have even an accident covered by the lowest price insurance, it can lead to major financial losses
  • Lead to Higher Deductibles: Another downside of purchasing the lowest-priced auto insurance premium is that higher deductibles come with it. A deductible is a percentage of the claim amount paid by the policyholder during the settlement of a claim First, you are bound to pay the deductible amount, and then the car insurance provider will give their share in the cost of the claim. The lower the premium rate is, the lower the insurer's obligation on the claim amount would be.
  • It May Not Offer Cashless Claims: One of the best aspects of the car insurance company is it offers the facility for cashless claims. Car insurance plans with cashless claims enable the owner of the car to have their car repaired in the insurer's network garage. Since the cost is covered by the insurance company, you are not expected to spend any money to repair the car. It saves you from shelling some money out of your pocket.
  • Poor Customer Service: A costly car insurance plan comes with comprehensive coverage, greater benefits, and effective customer support. Contrarily, a lower-priced car insurance plan provides only basic coverage, poor customer services, and fewer benefits.

Also, Read

Benefits of Buying Standalone Own-Damage Car Insurance

Who Should Purchase a Standalone Own-Damage Car Insurance

Bottom Line

Low-priced car insurance indicates lower coverage, benefits, higher deductibles, and poor customer service. Therefore, you must not choose the most affordable car insurance plan and look instead for a comprehensive car insurance policy that offers perfect coverage. Hence, buying a low-priced car insurance policy is not always in the best interest of your car

Disclaimer

This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.
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Written by Sharad Bajaj
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 Sharad is an insurance industry veteran who has managed motor insurance products for over a decade. He helped set up and scale the motor insurance vertical for a leading insurance company in his previous stint. In his spare time, Sharad likes to read and be in tune with nature.

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