If you're about to buy insurance protection for your valuables, it's rational to find a policy that suits your budget. After all, you'll have to pay the premiums regularly on monthly, half-yearly or annual basis. However, an affordable insurance policy might not guarantee the best protection for you always. Read along to know why:
- Might not offer sufficient coverage - The coverage limits of any forms of insurance policy is directly proportional to its price. Thereby, a cheap policy might not offer sufficient coverage to fit your requirements. Insurance requirements vary from person to person. Those who require higher limits of coverage will therefore have to pay high premium rates. Compromising on coverage to lower the cost of insurance policy is not at all a sensible decision. For e.g. an individual with an affordable auto insurance might only have the state specified minimum limits of liability protection. In case he gets involved an accident, and the damages or injuries are more than his coverage limits, he'll have to bear the surplus costs on his own.
- Might involve higher out-of-pocket expenses - One way to reduce the insurance cost is by raising the deductible for the policy. Individuals often agree to pay an increased deductible to trim down their insurance premiums. This would mean that when the situation calls for it, the insured would have to pay a lump sum before the coverage comes into effect. Thus, he or she must always have the deductible amount ready, since risks are unpredictable or the insurer would pay a reduced claim amount.
- Might not be accompanied with additional benefits - Cheap insurance policies might be well within your means. However, the insurers might offer additional service along with an expensive policy. The additional services might come in the form of customer service or roadside assistance for the vehicle owners etc.
- Might not be offered by a reputed insurer - Insurers who had been servicing the consumers for a long time are well aware of the industry and are preferred by the consumers, over the inexperienced insurers. Consumers are often willing to opt for an insurer if the claims process is hassle-free, even if it costs more. Thus, many consumers rely on the market reputation and consumer reviews when they go out to buy insurance coverage. Reputed insurers might also provide the assurance of sound financial backing, so that even during a severe disaster, the consumers will have guaranteed compensation. Such insurers who have grown into a brand name might charge more to offer insurance coverage.
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