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 — now it's time to start saving.
At this point your savings instincts might scream, "Get the cheapest car insurance possible," but barebones 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:
| 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 Reimbursement | Declined |
| Customized Parts and Equipment Coverage Limits | Declined |
| Auto Loan/Lease 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, you decide to tinker with your coverages, raising your limits as high as they can go and leaving all the other coverage options as above. Your new car insurance coverage looks like this:
| 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 |
You hit the "recalculate" button, but 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.
Still, $10 is $10, you think, imagining one extra movie ticket a month.
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 Limits | Accepted |
| Comprehensive Coverage and Deductibles | $1,000 |
| Collision Coverage and Deductibles | $100 |
| Towing and Labor | $75 |
| Rental Reimbursement | $25/$750 |
| Customized Parts and Equipment Coverage Limits | Declined |
| Auto Loan/Lease Coverage | Covered |
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 cheapest car insurance policy you could find ... and an unexpected accident
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.
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 also 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 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 — 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, in the long run. When you're comparing coverages, keep in mind what your coverage options really mean, what they'll protect you against, and most important, that the cheapest car insurance policy isn't necessarily the best car insurance policy.
Related links
Car insurance claims procedures
Learn what you need to know to get the claims process started right at the scene of an accident.
Coverage Counselor®
Want expert coverage advice without picking up the phone? Check out our Coverage Counselor® for sagacious online counsel.
Choosing auto insurance coverage
Hungry for more car insurance coverage knowledge? These FAQs should sate your appetite.
