Why the Cheapest Car Insurance May Not Be the Best Choice

Car insurance shopping would be a breeze if you only had to factor the cost of the policy. In that case, you would just have to identify the company that offers the lowest premium, and you would be good to go. But unfortunately, it does not work that way.

The gap between cheap and affordable insurance

In the realm of insurance policies, it is understood that you get only what you pay for. In other words, the coverage and benefits that you receive are directly proportional to the cost of the insurance policy. More often than not, cheap car insurance offer very little coverage. If you are able to pay a little more money, you can purchase an affordable car insurance that offers a good amount of protection.

Hence, it is wise to weigh out the price of the policy with the coverage to arrive at the most optimum policy for your needs. Picking the cheapest option can pose issues when you are eventually in a situation where you have to make a claim.

Disadvantages of choosing the cheapest insurance

The drawbacks of selecting the cheapest car insurance are many.

1. Insufficient coverage

   Cheap car insurance policies will include lesser benefits. The worst scenario would be the realisation that the policy does not include critical coverage, after the accident has already happened! Insurance policies are taken to assist you in the event of emergencies. If the cheapest car insurance does not offer adequate coverage, you should choose one that does.

2. High deductibles

   In an attempt to get low premiums on your car insurance policy, if you choose high deductibles, you will have to pay up substantial amounts after an accident. So, it is wise to assess your budget and find a balance between the cost of policy and coverage.

3. Poor response to claims and inadequate customer support

   Cheap policies are usually associated with disappointing customer support. As a customer, you can read reviews posted by others and understand how the company handles queries and claims.

4. Optional coverage

   Cheap car insurances may offer only a basic cover. For instance, the third-party liability coverage is mandated in our country, and most of the cheap policies offer only this cover. But it is known that the best coverage for the driver is provided by the comprehensive plan, in spite of higher costs.

5. Cashless claims

   Most insurance providers have their own network of garages, where they repair cars insured by them. The expenses are settled directly between the insurer and the garage, without much involvement from the owner of the vehicle. Expenses for accessories that are not included in the policy cover would, however, be borne by the owner. Moreover, the service provided by network garages are usually better than most local garages.

   In case you choose to get the car repaired at a garage outside the network, you will have to pay for it initially, and then claim for reimbursement.

6. Roadside Assistance cover

   The roadside assistance cover is a great addition to your insurance policy. This is particularly useful when you have a stalled car, an empty gas tank or a flat tyre. You can easily contact the 24 hour toll-free number for roadside assistance, and a repair facility will be dispatched to you. The services covered in this package usually include jump-start, fuel delivery, tyre change, winching and towing.

In summary, it is more important to include useful facilities such as cashless claims, personal accident cover and roadside assistance in your car insurance cover rather than narrowing down on a plan that is pocket-friendly.

GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017