Is Cheap Always The Best Option?

By Author: Marcus Stalder
Total Articles: 491
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If you do a little research, you find one of the most commonly used words in google searches is "cheap". No matter what the goods or services, everyone assumes the internet will be the best way of finding the cheapest version of whatever is required. Except, this rather misses the point. When marketers and advertisers know you are all looking for "cheap" (assuming no one will offer you "free" goods and services), they line up their offers in the bargain basement and wait for you to come along. There's the old saying, "Never give a sucker an even break" and you should not be surprised the majority of company's fail to have your interests at heart. They want your money and they will give you the smallest possible value in return. Don't take it personally. That's the way business works.

So, when you use the search engine on sites like this, what exactly are you getting? Well, the first thing is beautifully written offers. Insurance companies have had years of practice in making their offers sound really good. So always start with the assumption that cheap does not mean good value-for-money. This is going to need a little ...
... work from you. Yes, you're going to read the small print. Let's start with the good news. The premium rates are calculated using statistical models based on your age, where you live, what vehicle you drive and your driving record. So, when you input your personal information, most insurers pitch around the same rates - the statistics to calculate risks don't vary that much. Producing the cheaper rates therefore depends on limiting the claims you can make and persuading you to take the maximum deductible. This hits you with a double whammy. The small print has an alarming number of limitations and exceptions to plow through and then you grapple with the knowledge you will pay the first $1,000 plus out of your own pocket. Guess what. This is how insurers make the most money. The majority of traffic accidents are minor bendings of fenders and you're going to decide it's easier to pay for repairs out of your own pocket. This leaves the insurers with all your premium income as "profit". To encourage you to do this even though the claimed amount would be more than the deductible, the insurers warn you that making a claim is likely to result in a rate hike.

If you are only buying a liability policy to satisfy the mandatory requirement, cheap is good. It gets you on the road legally for the lowest possible price. But if you want more than basic liability coverage, go through the auto insurance offers carefully and find the policies with the most affordable terms giving you real protection. This is particularly important if you have a car loan or a rental contract. These agreements usually require you take out comprehensive and collision auto insurance. This protects the lender or owner's interests should you be unlucky enough to be involved in a more serious accident. In such cases, it really does pay you to read the small print and buy the best value and not the cheapest policy.