The meaning of cheap auto insurance is low-cost, but low-cost is often associated with less than desirable quality. At Compass Insurance Agency Lansing, we want you to pay less for auto insurance. But that doesn’t mean it’s going to be super cheap. Because cheap insurance provides insufficient coverage, leaving you financially vulnerable, and ending up paying a lot when an accident strikes.
Let’s look at what auto insurance covers and what you are paying for, or not.
Liability Coverage
Auto insurance liability helps you pay for damage or injuries you caused to someone else, both the driver and passengers (bodily injury per person and per accident) and to the vehicle(s) and/or properties per accident while driving your car.
There are limits to the amount of liability coverage, expressed in a series of numbers. A cheap auto insurance might provide 15/30/10 coverage per accident, meaning it pays up to $15,000 per person for bodily injuries, $30,000 for total bodily injuries, and $10,000 for property damage.
Anything above those amounts you are legally responsible for. Many states require minimum liability coverage well above 15/30/10. For example, Michigan’s minimum auto insurance liability requirements are 50/100/10, $50,000 bodily injury liability per person, $100,000 bodily injury liability per accident, and $10,000 property damage liability per accident outside Michigan ($1 million property protection within Michigan).
Michigan also requires a minimum of $250,000 for Personal Injury Protection (PIP), which covers medical expenses for the insured and any passengers in an accident, regardless of fault.
So if you’re living near Lansing, MI, you might think, well, let’s just go with the state’s auto insurance requirements. Maybe. But you do take a risk. Even minor collisions can run up a not so cheap bill, and before you know it, you’re liable for tens of thousands of dollars in repairs and medical expenses for a little fender bender.
That’s why we at Compass recommend a minimum liability coverage of 100/300/50. You may need more, depending on your assets. If you can’t pay a claim out-of-pocket and you don’t have many assets, there isn’t much to attach to settle the claim, and there’s less incentive for someone to sue you. On the other hand, if you have a high net worth, you want to protect yourself with as much liability coverage as possible.
Collision and Comprehensive Coverage
Collision and comprehensive coverage are different but are usually bundled together.
Collision covers you for an accident you cause with another vehicle, an accident with a car driven by someone else with your car, as well as if your car hits a wall or some other object.
Comprehensive pays for the actual value of your vehicle if it is stolen or vandalized, as well as if your car hits an animal such as deer and severe weather conditions cause damage.
If you own your vehicle, you don’t necessarily need either coverage, particularly if your car is old and the insurance isn’t going to pay out much for damages. If you finance or lease, collision and comprehensive are required; obviously, the lessor doesn’t want to risk taking over a banged-up vehicle at the end of the lease.
A cheap auto insurance policy carries a comparatively lower premium due to a higher deductible or no coverage at all. But cheap auto insurance with little or no collision and comprehensive poses a financial risk if you ever need to pay more out of pocket in the event of an accident.
Other Types of Auto Insurance Coverages
Liability, collision, and comprehensive are the main things to look at. However, you can also buy additional protection, such as towing coverage, additional medical expenses, and windshield and window breakage. That, of course, is not cheap auto insurance. You take the risk that if uncovered claims ever occur, you are financially liable.
That said, you don’t want to pay for coverage you don’t need. Most car leases include roadside assistance, so you do no need to pay for extra towing insurance.
How Can We Help?
As independent brokers, we work for you, not the insurance companies. And as Lansing’s leading local auto insurance agency, we work with more than 20 insurance carriers to get you better rates, better customer service, and better coverage.
By having the power to compare auto insurance policies, we save our Michigan clients on average $796 per year!
According to one report, 77% of drivers experience at least one accident; the same report noted that your chances of getting in a car accident during a 1,000-mile trip is 1 in 366. Yikes! You are going to need all the savings and coverage you can get.
The best auto insurance for you may not be super cheap up front, but it will protect you from paying a lot more if you are ever in an accident.
