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Bargain Insurance Coverage Could Leave You Broke

In today’s insurance climate, many people are looking for the lowest price on their insurance policies. Television and radio commercials bombard consumers with claims of saving you the most money in the quickest amount of time. I admit, this kind of media onslaught is hard to ignore. But ask yourself, “What am I getting for this low price?” In most cases, the answer is simple: you aren’t getting nearly as much as you think.

When purchasing insurance, you should look at which insurance option presents the best value, not the cheapest price. What good is buying a cheap insurance policy if it isn’t protecting you properly? Review the coverages you’ll receive for your premium in comparison to what other carriers can offer you, and be sure the coverages provide enough coverage that you are adequately protected in the event of a claim. If you’re unsure which coverages you need to properly protect yourself, consult an insurance agent for assistance. A good agent can provide you with guidance, advice, and the best options for meeting your individual needs.

Let’s look at auto insurance for a moment. Property damage is the part of the policy that will pay for damage you cause to someone else’s property. This includes vehicles, buildings, landscaping, and pretty much anything else you can damage with your car. For this example, let’s say your insurance carrier offers a limit of $250,000 for this coverage, but you purchase just $50,000 in coverage in order to save $50 per year. A few months after purchasing the policy, you’re driving down the road jamming out to your favorite song and don’t see the driver in front of you hit their brakes. You slam into the back of their car causing enough damage to total it. Unfortunately, the car you hit happens to be a brand new 2022 Toyota Sequoia with an MSRP of $85,000. Because you only have $50,000 in property damage coverage, you must pay $35,000 out of your own pocket to cover the difference. So while you’ve saved $50 a year on your premium, you are now out $35,000. Now think how much worse this scenario could be if the vehicle you hit was an upscale BMW or a Mercedes. Or what if you put your car in drive instead of reverse and knocked your garage off of its foundation? (Yes, this seems unlikely, but trust me, people hitting buildings with their vehicles is way more common than you might think!) When you really think about all ways you could suffer a loss and possibly end up paying out-of-pocket, is saving $50 a year really worth it?

Insurance should be purchased the way you purchase any other big-ticket item: with careful thought and research. You wouldn’t buy a new car just based on it being the cheapest option, would you? Insurance should be no different. And as I’ve demonstrated above, purchasing the cheapest option can actually cost you more in the long run.

The next time you are shopping for an insurance policy, be sure to purchase coverage that will adequately protect you and is backed by outstanding service from a reputable insurance carrier. After all, you get what you pay for and peace of mind is priceless.

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