minimal coverage = minimal protection

why less car insurance can mean added risk

Say you decided on the car of your dreams, a gleaming black hot-off-the-assembly-line Jetta, and now it's time to find the right car insurance policy for you. You've done your homework and opted to go with Esurance (great choice) — now it's time to start saving.

At this point your savings instincts might scream, "Get the cheapest car insurance possible," but bare-bones liability and high deductibles look a lot worse when you're staring at the mangled mess that used to be your new Jetta's front end.

Getting the cheapest car insurance

Say you select the cheapest policy you can get and buy a policy that looks like this:

Liability coverages
Bodily injury limits	$15,000/$30,000
Property damage limit	$5,000
Medical and funeral services payments	Declined
Uninsured motorist bodily injury limits	Declined
2012 Volkswagen Jetta
Uninsured motorist property damage limits	Declined
Comprehensive coverage and deductibles	$1,000
Collision coverage and deductibles	$1,000
Towing and labor	Declined
Rental car coverage	Declined
Customized parts and equipment coverage	Declined
Auto loan/lease gap coverage	Declined

With these options locked in, you've got insurance for about $75 a month, or about $450 for the whole year if you pay all at once. You think, "Who says you can't find affordable car insurance these days?"

Tickled by the thought of how much you might be saving but wondering how much additional coverage would cost, you decide to tinker with your policy. You raise your limits as high as they can go and leave all the other coverage options as above. Your new car insurance coverage looks like this:

Bodily injury liability limits	$250,000/$500,000
Property damage liability limit	$100,000
Medical and funeral services payments	Declined
Uninsured motorist bodily injury limits	$100,000/$300,000

You hit the "recalculate" button and you're a little surprised when the numbers come back: Your monthly rate only jumped about $10, and the pay-at-once total rose a mere $50. Not bad.

But you're not satisfied. You're a savvy car insurance shopper, after all, intent on saving as much as possible. So you go back to the quote form, this time adding all those optional coverages you left out before (except for customized parts and equipment), and lowering your collision deductible to $100.

Liability coverages
Bodily injury limits	$250,000/$500,000
Property damage limit	$100,000
Medical and funeral services payments	Declined
Uninsured motorist bodily injury limits	$100,000/$300,000
2012 Volkswagen Jetta
Uninsured motorist property damage coverage	Accepted
Comprehensive coverage deductible	$1,000
Collision coverage deductible	$100
Towing and labor	$75
Rental car coverage	$25/$750
Customized parts and equipment coverage	Declined
Auto loan/lease gap coverage	Accepted

Now you're starting to see how much that basic package saves you. Monthly jumped about $45 to $120, and the pay-at-once option soared by $270, reaching a total of $720.

Well, that was fun, you think, but time to restore my options back to those minimal settings. You fiddle with dropdowns for a minute and soon you're back to your über-affordable basic coverage package. You buy and print your ID cards and you're ready to hit the road.

The car accident: natural enemy to the cheapest car insurance policy

One bright spring morning 3 months later, you're on your way to work, cruising east down the highway thinking about how much you're saving on car insurance (we don't judge).

Musings on actuarial bliss turn to sudden panic as you realize the car in front of you has braked for no apparent reason. The car ahead fishtails as you slam your foot down on the brake pedal, hoping your antilock brakes stop you in time.

But it's no good. With a tortured squeal of metal on metal and the crunch of shattering glass, your front end rips into the other car's rear fender, turning your 2 cars into a jigsaw puzzle of broken parts and crumpled body panels. The air bag balloons from your steering wheel as you come to a dead stop, cushioning your face as the chest strap of your seat belt strains across your chest. The air bag slowly deflates, unveiling the clouds of steam wafting from the shattered remnants of your radiator.

Groaning, you open the door and slip out of your car, walking gingerly toward the other driver, who appears to be unscathed. The 2 of you talk for a moment, and you learn the other driver braked to avoid an impetuous northbound squirrel. You can't help but laugh, but that smile quickly fades when you ask for the other driver's insurance info and he admits he has none.

Sighing, you pull out your phone to call the police and Esurance.

The accident aftermath, with another look at the numbers

Here comes the bad news. By raising your collision deductible from $100 to $1,000, you managed to save $270. But in having to file this claim to get your car fixed — even though you weren't at fault — you had to pay $1,000 out of pocket. Which means that instead of saving $270, you lost $730 by buying the cheaper car insurance policy.

Plus, it turns out that while you thought you were okay immediately after the accident, you soon started suffering symptoms of whiplash, leading to missed work days and a series of medical bills — expenses uninsured motorist coverage can help you cover.

Making the most of your coverage options

As you know, accidents happen. And spending a few extra dollars a month can save you hundreds, if not thousands, when an accident happens to you. When you're comparing coverages, keep in mind what your coverage options really mean and what they'll protect you against.

And most important, remember that the cheapest car insurance policy isn't necessarily the best car insurance policy.