Does Cut-Rate Insurance Really Save You Money?

Getting a great deal on car insurance is a big plus. But you should be cautious when it comes to cut-rate insurance. If the offer seems too good to be true, very often it is.

When considering the purchase of an inexpensive policy, it’s important to comb through it to see what exactly it includes. Additionally, you should research the reputation of the insurance provider. Here are some red flags to watch out for.

• Minimal coverage.

If the price is low but so is the coverage, the policy isn’t a good deal after all. In fact, having a bare bones insurance policy can end up costing you much more in the long run. For example, a cut-rate policy typically doesn’t provide glass coverage, so if your windshield gets cracked, you’re left to pay the full cost on your own. 

• Limited coverage for repairs.

Look at the fine print for repairs. For example, some policies factor in depreciation before paying out for covered repair work. That is, instead of paying the full repair cost, they pay only a percentage based on the depreciated value of the vehicle.

• Cheaply done repairs.

Ask the insurer about their preferred repair shop or shops (the places they recommend that you go to in the case of an accident). Sometimes companies providing cut-rate insurance work with cheap, second-rate repair shops. Research the repair shop in question to find out if this is the case. Note that you aren’t obligated to use the shop the insurer recommends. However, when you don’t, you’re responsible for managing the repair yourself.

• Large deductibles.

Often, cut-rate insurance will offer a lower premium but will make you pay a high deductible in the case of an accident. The deductible is the amount you have to pay out of pocket before the insurance company will pay. Generally, deductibles range from $500 to $5000. Having cut-rate insurance could mean having to put up several thousand dollars versus several hundred after an accident. 

• Subpar customer service.

When an accident occurs and your car is damaged, you don’t want to have to wait a long time for repairs. Often this is the case with cut-rate insurance because the company only employs a small number of claims agents. 

So always be very cautious about purchasing cut-rate insurance. Read the fine print, do some digging and ask the company a lot of questions before committing to a new policy.

Comprehensive car insurance in Halifax and surrounding areas

Looking for affordable and reliable car insurance in Nova Scotia? The car insurance brokers at Eisenhauer Insurance work with you to select a policy that suits your needs. We give you competitive rates, personalized service and have a 24/7 emergency claim service. For more information, or for a free quote, reach out to us today.