Everybody wants lower car insurance rates, but you could wind up sorry if you shop by price alone. Skimping on coverage can leave you financially exposed and wishing you had spent more for better protection and service. "Don't shortchange yourself," says Anna Molin, an independent insurance agent with Huntington & Wheatsworth in Towaco, N.J. "In the long run, it's not worth it, and it's really not that much more to get something decent." That doesn't mean you ignore price. But when comparing car insurance quotes and policies, make sure you compare apples to apples. "People think they're comparing apples to apples, but sometimes those apples are rotten," says Addison Gardner, owner of The Gardner Insurance Group in Oklahoma City. Here are seven ways cheap car insurance can backfire:
1. Not enough liability insurance to cover your assets
Most states require you to have liability insurance, but the minimum amounts you have to buy are low. California's minimum liability limits of 15/30/5 were set in 1967, says Tully Lehman, a spokesperson for the Insurance Information Network of California. (That's $15,000 per person for bodily injury liability, $30,000 for bodily injury per accident and $5,000 for property damage.) "You can exceed that $5,000 limit very quickly," he says. "The same goes for bodily injury." Once the limits are exceeded, you're on the hook for paying damage or injuries you cause, and accident victims can sue you for your assets. Gardner says he runs into a lot of consumers who got sold a cheap policy and were told they had "full coverage." But actually they had only the bare-minimum liability insurance with some collision and comprehensive coverage. "If you own a $200,000 house and you hit someone with a $100,000 Mercedes, guess where the lawyers are going to dip to get the money?" he says.
2. An unaffordable auto insurance deductible
Raising the deductible on collision and comprehensive insurance is one way to lower premiums, and it's preferable to forgoing collision and comprehensive altogether if you have a car with some value, Molin says.