Potential Limitations Of Cheap, Nonstandard Auto Insurance Coverage
Everybody is looking for cheap auto insurance. From tinkering with deductibles to combining policies, there are several things you can do to lower your premiums. It is all good as long as your insurance still gives you the coverage and protection you need. Just know that there are several dangers of customizing your auto insurance too much. Here are four examples of these limitations:
Reduced Coverage for Some Drivers
Ensure that your low premiums still cover everybody that may drive your car. This is necessary because some ultra-cheap premiums reduce coverage for drivers listed in a combined policy. Therefore, your teenage child or close friends who occasionally have use of your car may not be fully covered as you would wish. These are people that are usually covered by standard auto insurance packages.
No Coverage for Punitive Damages
If your gross negligence leads to a car crash, then a personal injury court may order you to pay punitive damages. Courts mete out these monetary fines to punish motorists' recklessness. If you have a standard car insurance policy, your auto insurance company will pick up the tab for these damages too. However, you will have to use your private funds if you have a nonstandard policy.
Standard auto insurance coverage often comes with added benefits. A good example is accident forgiveness, which prevents a premium increase after your first at-fault crash. However, depending on your insurance company's policies, you shouldn't expect these benefits if you have tinkered with your coverage to pay the lowest premium possible in the state.
One increasingly popular way of lowering premiums is to opt for mileage-based insurance. In this case, the insurance company calculates your rates based on a limited annual mileage. If your mileage exceeds the limit, then your premiums increase. This option may be good if you are certain of keeping within the limit, for example if you only drive the car to and from the office (that is nearby). However, it can be frustrating to reach this limit before the year ends because you will have to pay more for your coverage.
If you have a cheap, highly-customized auto insurance package, are you sure that it offers you all the protection you need? Consider the limitations above, and see if one or more of them apply to your case. If that is the case, then it's time to call your insurance company or agent and remedy the situation.