Most Common Auto Insurance Traps and How to Avoid Them
Introduction Owning a car implies an insurance. There is just no way around it. As you ought to get covered (not by choice but by obligation), it is only natural to search for the cheapest insurance so as to keep your hard earned money. When you start shopping around, you soon find that some companies promise the moon and the stars, and you might feel attracted to their offer. After all, if you can get a better deal than elsewhere, it would be stupid not to jump on the occasion, wouldnâ€™t it? Unfortunately, it is not always so simple. Some insurance companies do not tell you all the truth and you often find out about it when it is already too late! To discover the usual traps laid out in certain cheap contracts, follow us through this presentation.
You Pay Less, You Get Less Always keep in mind that there is a risk that when you pay less, you will get less in terms of benefits. While it is by no means a set rule, you will often find that more expensive policies provide better coverage. One area where that can play against you is when you will be in need of repairs. Where a regular insurance may pay the price in full to fix your car, a cheaper policy might only intervene for a fraction of the cost, due to depreciation. Therefore, you should really pay attention to that topic if your car is getting oldâ€Ś
At their Mercy Usually, there is a clause in most standard insurance policies called the "appraisal clause" which states that â€“ in the event that your car gets totaled and your insurer decides to give you less money than what you judge it worth â€“ you have the right to challenge that decision by asking for an appraisal. That clause might be absent in cheaper policies or severely restricted. For example, in the event that no agreement could be found between your appraiser and that of the insurer, you might not call on the court of jurisdiction to settle the matter and give a positive outcome to your dispute, and you might find yourself in deep trouble!
Occasional Driver Another point to take into consideration is how often you drive and how many miles you travel each year. In case you are often on the road, covering long distances, you may find that you exceed by far the limit set by the insurance policy. Which means no coverage should your vehicle sustain any damage! With a limit ranging from 2,000 to 3,000 miles (which is really small), most cheap insurance policies are only interesting for the occasional driver. Just taking your car to work every day translates to 2,500 miles a year if you live only 5 miles away from the office! Always make the calculation beforehand to ensure you will not need more miles.
The Loyalty Trap Common sense would have you believe that if you stay with an insurance company for several years, you will benefit from preferential rates. After all, that is how most businesses operate; to thank their loyal clientele for their trust and support, they send coupons, offer free gifts, lower their priceâ€Ś Unfortunately, when it comes to insurance, it could not be further from the truth. In fact, your loyalty might cost you in the end as some insurers increase their premiums every year for the existing clientele in order to provide new customers with the attractive offers. In short, never autoextend or risk becoming the cash cow for your insurance company!
Only Youâ€Ś While regular insurance policies will cover your car, no matter who is behind the wheel, you may find that your cheap package will only intervene if you were the one driving when the incident happened. This can become tricky and risky if members of your family use your vehicle on a regular basis as any accident they may find themselves in may not be covered at all (or only for a minimum)! This is called a step-down provision, and you should always check your contract to see whether it has been included or not before you agree to signing anything.
Conclusion In the end, as you will have understood by now, it all boils down to making due diligence and always reading the fine print. Always be aware of what you sign and are getting into when looking for a cheap insurance policy. You can get a bargain if you search well (because they do exist) but you could also find yourself with an abusive and less than desirable contract on your hands. So beware and good hunting!
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Auto insurance is essential for all vehicle owners. Read this handy guide to educate yourself on the most common auto insurance traps and ho...