Pros and Cons of Cheap Car Insurance Companies

Auto insurance is one of the products that we comparison shop the most, so car insurance companies compete on a number of platforms.

What are the benefits of car insurance? In many states, drivers are required to carry at least a minimal form of car insurance, and insurers know this. Because of this, the price seems to be the selling point that insurers push the most.

A number of insurers center their ads on cost savings while other insurers focus on the quality of their service without making claims about how much they save the consumer.

With so many companies competing, it’s natural to wonder why some companies are able to offer premiums for so cheap.

What are the advantages and disadvantages of cheap car insurance? Here we take a look at some of the pros and cons of cheap auto insurance companies and what issues you should consider when comparison shopping.

The easiest way to find very cheap car insurance is to enter your ZIP code in our car insurance comparison tool.

Pro: Cheaper Auto Insurance Companies Can Save You Big Money

If you’re the type of driver who has never had an accident and rarely gets tickets, cheap car insurance companies can save you quite a bit of money during your life.

You might also want to ask your car insurance company about the good driver car insurance discount.

One study estimates that Americans will spend $84,388 on car insurance during their lives. Using this figure, a company offering a 15 percent savings over the average would then save you $12,658.20 during your life.

When comparing insurance company costs, it’s incredibly important not to overlook a difference of a few dollars.

If you’re paying monthly, just a $5 a month difference in premiums is equal to saving $60 a year! When doing comparison shopping, always pay attention to the details.

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Con: Cheaper Companies Might Provide Cheaper Service

Using a cheap car insurance company might cause you a bit of frustration if you ever file a claim.

As mentioned before, the cheaper rates that car insurance companies offer have to come from some sort of cost savings on the company’s end.

There are a few ways that car insurance companies might slash their own costs in order to pass the savings on to you including:

• Paying lower wages to their employees
• Maintaining fewer support staff members
• Keeping fewer people on hand to review a claim

Any of these scenarios can result in longer wait times for you and potentially worse service.

The threat of poor service is so strong, in fact, that Allstate has introduced a Claim Satisfaction Guarantee, in which they offer a discounted premium to customers who aren’t satisfied with their claim.

To some, a policy such as this that offers extra security might be worth the extra money compared to a cheap insurance company.

Read more: Are small car insurance companies a good option?

Pro: You Might Actually Get Better Service From a Cheaper, Smaller Company

When you’re comparing costs for auto insurance, there might be another reason that a company is offering a cheap rate: They might be newer and trying to gain market share.

The low rate they’re offering might be backed by an upstart company that is trying to gain market share. They’ll be more likely to go out of their way for you.

These situations are beneficial for all parties involved, but they’re also rare.

Read more: Finding Reasonable Car Insurance Rates

Con: The Cheap Auto Insurance Company Might Not Last

Some car insurance companies launch and simply don’t last long after their founding.

It’s an unfortunate reality, but the cheap company that promises quality service might balk at fulfilling your claim.

They might even try to use sneaky tactics to keep from paying your claim because every penny is important. This is one of those things that’s harder to detect while shopping for auto insurance.

Your best bet is to check reviews of cheap insurance companies that aren’t very well-known nationally.

Finding out if you know anyone who carries insurance with that company is another way to find out what kind of service they actually offer.

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What is the cheapest and best car insurance?

There are a handful of different advantages and disadvantages that cheap companies offer.

The best advice is just to do an adequate amount of research.

If possible, talk to others who have used the companies you’re considering, and you’ll be able to find a company that suits your needs in terms of price and customer satisfaction.

Enter your ZIP code below and we will help you find the best car insurance for your needs.

Case Studies: Pros and Cons of Cheap Car Insurance Companies

Case Study 1: Cost Savings Through Affordable Car Insurance (John)

John, an exemplary driver, achieved substantial financial savings amounting to $12,658 by securing a 15% discount from a cost-effective car insurance company. His impeccable driving record, coupled with the company’s competitive premiums, resulted in noteworthy long-term cost reductions.

Case Study 2: Balancing Service Quality Considerations (Sarah)

Sarah encountered considerable frustration when she had to file a claim with a low-cost car insurance company. Lengthy waiting periods and limited availability of customer service resources contributed to her dissatisfaction, despite the lower premiums offered by the company.

Case Study 3: Emergence of New Market Players (Mark)

Mark enjoyed exceptional service from a smaller, more affordable insurance company that aspired to establish a strong presence in the market. Their dedication to carving out a niche for themselves resulted in personalized attention and proactive assistance that exceeded his expectations.

Case Study 4: Reliability and Longevity Concerns (John)

John’s insurance claim was unjustly denied by a low-cost car insurance provider that had a short-lived existence. He encountered numerous difficulties during the process and learned firsthand about the significance of conducting thorough research on reviews and the longevity of insurance companies before making a provider selection.

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