The risks of cutting back on car insurance

Everyone wants the best possible deal on auto insurance. At belairdirect, we understand this mindset. But there’s a difference between being a smart shopper and trying to pay as little as possible without contemplating the consequences.  

To give you an idea of what you get for less, we used our Coverage Advisor* to break down an insurance policy into its main components. This will help you make an informed decision about your insurance by revealing what you get (or, rather, don’t get!) when you buy insurance on the cheap.

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What’s the purpose of having car insurance? First of all, it includes Liability coverage, which is what an insurer will cover if someone is killed or injured in an accident, or if their property is damaged, when you or other insured persons are at fault in the accident.

You can also add other types of basic coverage to your insurance policy: to protect against damage to your vehicle sustained in an at-fault collision, for instance, or to protect you against theft or vandalism.

The deductible

So, what exactly is a deductible? It is the amount you agree to pay toward the cost of any single claim you make. For example, if you have a deductible of $1,000, you will not be covered for damage below that amount. However, if your deductible is $500 and the total claim on your car comes to $2,500, then you will get $2000 back after the application of the deductible.

Our Coverage Advisor confirms that having a $1,000 deductible will lower your premium, but it means you’ll be responsible for any amount less than $1,000!

Raising your deductible is less expensive on paper, but if you ever have an at-fault accident, you may regret the decision.

One-way insurance   

We’re not talking about street directions here, but rather the question of civil liability, referenced earlier. One-way car insurance policies provide Liability and Direct Compensation Property Damage (DCPD) coverage only. If you are at fault in an accident, your policy will only pay for damages sustained by other drivers. Your insurance will not cover the repair or replacement of your vehicle. You will also be without comprehensive coverage. For example, if you are the victim of a vehicle fire or theft, there will be no coverage!

It’s definitely something to think about!

Collision or upset + theft and vandalism 

In theory, they can be dropped from your coverage, but that would leave you uninsured in the event of an at-fault collision, upset, theft or act of vandalism. The deductibles for these protections can also be modified, bearing in mind the point about deductibles mentioned earlier. You would only be covered for civil liability and nothing else. It’s bad enough to be the victim of theft or vandalism; imagine how much worse it is when you aren’t covered for it!

Crash-proof policy

Did you know that if you skid on a patch of ice and hit a snow bank, it counts as an at-fault accident? That’s why it’s useful to carry coverage like the crash-proof policy, which ensures your premiums will not go up as a direct result of your first at-fault accident.

Instead of cutting back, be forward-looking!

If you’re eligible for it, a program such as Automerit lets you save money based on your good driving habits. Also, if you haven’t had your policy reviewed recently, an agent can review to ensure you are receiving the best possible coverage and all applicable discounts.

What about your house?

Combining your home and car insurance with the same insurance company is another way to save money, as our Coverage Advisor confirms!

But be wary of cutting back on your home insurance coverage. Policies typically contain specific limitations for certain types of property. Paying less can mean having a $1,000 or $2,000 limit on your jewellery. For instance, when you own $5,000 worth and you’re burglarized, you won’t be covered for the full value of your jewellery!

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In short, it’s advisable to shop around and learn more about various coverage options. Always keep in mind that the less protection you opt for, the less coverage you get!

*Try our Coverage Advisor by getting a detailed car insurance quote our website!