What is the difference between cheap and affordable car insurance?

With cheap car insurance, you get what you pay for. Affordable car insurance gives you adequate protection at a competitive price.

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Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: May 9, 2020

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Here's what you need to know...

  • Cheap coverage usually means a fast way to get a minimum amount of insurance
  • Affordable coverage is inexpensive insurance that will adequately protect you
  • Know the ways you can lower your insurance rates such as applying for discounts

You want to get the most out of your insurance policy. However, there certainly is a difference between cheap insurance and affordable insurance.

Buying cheap insurance will not get you very far. Buying affordable car insurance means you pay just enough for the best possible coverage.

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Cheap Coverage vs Affordable Coverage

There is a significant difference between a cheap policy and an affordable policy.

Cheap policies are rarely worth the paper they are printed on. You never know who you are being insured by in most cases. Your insurance provider could really be someone who is taking your money with no plans to ever offer coverage.

The cheapest insurance companies offer policies you buy simply to have the mandatory coverage. These types of policies are the ones you buy from obscure online companies who are willing to give you proof of insurance for a small fee.

Affordable policies are policies that give you exactly what you need for a price you can afford. Personal injury protection, medical coverage, and other extras are included for a reasonable price.

Your deductible is something you should be able to pay out of pocket should your car ever be damaged. Affordable insurance policies come from reputable insurance companies who will be available should you ever need to file a claim.

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Downsides to Cheap Car Insurance Companies

They say that you get what you pay for. Ultimately, you get almost nothing when you pay almost nothing for your insurance policy.

Insurance quotes for cheap coverage are available because the insurance company has almost no overhead. They don’t have any customer service representatives or an office somewhere that needs to be staffed.

Your level of coverage is also going to be almost non-existent. If you only buy a cheap policy as a means to maintain the required level of coverage, you will probably need more than what most states mandate as a minimum level.

Damages in a car accident can easily cost thousands of dollars. Additional medical bills increase that amount significantly. Potential property damage should be considered as well.

Don’t forget that you can be personally liable if your insurance fails to cover all the damage from an accident.

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Finding Affordable Car Insurance Coverage

The best way to find an affordable policy is to use a comparison website. Using one of these sites allows you to compare many different quotes in just a few minutes.

Online tools also allow you to customize your quote to get just the right level of coverage for your car. You can set your deductible, add and remove coverage, and see your monthly payment for auto insurance.

Another option is to call different companies to see what kind of rates you can get.

Some companies will quote you one price online while giving you another price when you actually want to buy the policy. The price may vary because any accidents, violations, or credit issues may not be factored into an online quote.

Making Your Affordable Policy Cheaper

Just because you should avoid cheap insurance doesn’t mean you shouldn’t take steps to lower your premium. Part of buying an affordable policy is getting as many discounts as possible.

Consider bundling your auto insurance with another existing policy you have. Being a safe driver will also help you to save money on your car insurance.

Additionally, paying your policy in full can save you even more on your next auto insurance policy.

Never buy an insurance policy that doesn’t provide adequate protection in the event that your car is damaged. It will cost you less to simply buy proper coverage than it would if your insurance doesn’t cover the cost of an accident.

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