The Problem with Cheap Auto Insurance Quotes

Are you looking for cheap auto insurance quotes? You’re not alone. Everyone wants to save money on their insurance. But it’s important to be careful when comparing quotes. Just because a quote is cheap doesn’t mean it’s the best deal for you.

The problem with cheap auto insurance quotes is that you don’t know what’s making them cheap. Is it because the carrier likes you more? Or is it because they’re giving you a shell of a policy compared to the other one or compared to what you have now? And how do you know?

That’s where we come in. For over 15 years, the Horan agency has been helping auto policy shoppers like you. We understand the frustration you experience when searching for affordable auto insurance. It can be downright confusing.

We can help you understand the different factors that affect your rate. And we can ensure you’re getting the best possible coverage for your needs and budget.

In this article, we will explain why some auto insurance quotes are cheaper than others. And we’ll tell you what you should look for when comparing them.

Four Factors That Lead to Cheap and Problematic Auto Insurance Quotes

We’ll start by saying this. If two quotes from competing carriers offer similar coverages and one is cheaper, well and fine. Or you might see a quote that comes in less than your current policy premium. And the coverages are also the same. In that case, you might want to grab that new policy.

But when faced with a cheap quote, often the issue isn’t the price tag itself. It’s the lack of transparency surrounding what makes one quote cheaper than another. Sometimes important details remain hidden from view. Or you misunderstand the offer. Other times, the carrier hasn’t factored all details about you and your vehicle into the quote.

In our experience, we have seen this. Four primary factors lead to cheap but problematic auto insurance quotes.

1. Inaccurate Driver Information

Motor Vehicle and Loss History Details Are Off

A lot of times, we ask insurance customers, “Have you had any claims in the last five years?”

Their answer? “No.”

And it’s not that they’re lying. It’s easy to forget you hit a pothole driving through Utica three years ago. While it led to a $1,800 claim, time passes, life is lived, and people move on.

But realize this. Each time an insurance agency runs a motor vehicle and loss history report for a customer, it costs them. Some agencies fetch quotes without running any reports. They rely on the information the customer provided and nothing else. When those quotes come back, they often show low premiums. But a recent claim history is not accounted for.

The cheap auto insurance quote amazes the customer, who does a little song and dance. But before the quote can go into effect, the agent has to pull those records. Lo and behold, a claim shows up. One the customer forgot because it happened three years ago.

The policy premium shoots up and is now in line with all the other quotes. We know these things happen. We get it, and we don’t hold it against you. But we want you to understand the quote process and what affects rates. That way, you’ll have a realistic view of what to expect during your search.

So, before you breathe a sigh of relief when looking at a cheap auto insurance quote, confirm that:

1. The insurance agent has run your motor vehicle report for all drivers
2. They have run your loss history report for any claims in the last five years

Confirm that the quote bases rates on those reports.

No Vehicle Identification Number (VIN)

On occasion, a quote will come back with a generic vehicle listed in place of your actual vehicle. Reason being? The agent used no VIN. Rather than the Toyota Highlander Hybrid you drive, the quote rates a standard Toyota Highlander. Your hybrid is more expensive to replace. But because the quote reflects a standard version of your car, the quote comes in lower.

The VIN will zero in on the type of car you drive down to the trim package. It leaves no wiggle room for guesswork. Assuring that the agent uses the correct VIN for your vehicle will lead to an accurate quote.

All Drivers Not Listed

You went searching, and a cheap auto insurance quote came back. But the insurance agent didn’t add all household drivers. The premium on your current policy may be higher because that policy lists all drivers.

You mentioned your wife, but they never added her to the quote.

You may have a teen driver who they failed to add to the quote.

Or, the drivers in your household weren’t assigned to the right vehicles. Your son drives the pricey Volvo to work but was assigned to the Nissan Sentra for the quote by mistake. This also skews the quote process.

When sourcing quotes, it’s critical that you list all drivers and the vehicles they’re assigned to. Otherwise, a cheap quote will lure you in and lead to disappointment.

Wrong Vehicle Use Details

These days, carriers are getting more precise about how they rate vehicle use. This relates to how you drive your car. We’re talking distance and purpose.

• Are you driving to school and home,
• to work and home,
• or something different?

You might work from home and drive to run occasional errands and keep appointments. Or, you might drive your car more than you realize.

The accuracy of your vehicle use determines your true policy rate.

Say you’re in the market for an auto insurance quote. You tell the agent you drive your car 8,000 miles per year. He notes that and runs the quote. It comes back low. Song and dance time! For some insurance carriers, six months or a year might pass before they learn something else. You really drive much more. At renewal, your premium soars.

Other carriers access vehicle inspection reports to learn your recorded mileage from year to year. They see your mileage went from 64,500 one year to 76,800 the next. The 8,000-mile estimate you gave is off. Result? Your premium goes up.

So you need to be diligent as a consumer and confirm that the data you provided for a quote is accurate. Make sure the agent uses the precise details you gave to fetch the quote.

2. Hidden Discounts

There are times when you’ll receive a quote that includes hidden discounts you’re not ready for. And you may not qualify for others. Here are a few examples.

Payment Plan Options

You’ve narrowed down a carrier through a CNY insurance agency. Your phone vibrates. It’s a notification. The quote comes through from your agent with rates so low they’re scraping the floor. You smile and go about your business.

A few days pass, and your agent reaches out for a decision. “Good afternoon. Just wanted to know if you’re ready to buy the policy. We’ll need to take payment today for $1,305.

“Whoa! Slow down,” you say. “I don’t want to do that today. Or any day. That sounds like the entire annual bill!”

“It is. For you to get this rate, you have to pay in full. The 13 percent discount comes with that option.”

You tell him, “I’d rather pay monthly. What’s the cost if I do that?”

Your agent sighs. “It’s $125. You’ll end up paying $1,500 a year.”

“I’m not doing that.”

“Then disregard the quote.”

Your payment plan option can determine how much you pay for your auto insurance policy. Some carriers offer a discount if you pay the full annual amount upfront. They also charge you more if you pay monthly.

This can make a big difference in your total cost, and you might not be aware of it until you get the quote. That’s why it’s important to compare different payment plan options. Then find the one that suits your budget and preferences.

Defensive Driving Course Discount

Some agents will add a discount for the defensive driving course to your initial quote. But you haven’t taken the course yet. The premium rate reflects that discount regardless. The agent might want to show you a quote with the lowest possible rate. But that rate requires you to take a course you don’t qualify for yet.

If you don’t take the course by the effective policy date, the discount disappears.

When the new policy rate comes in without the course added, your premium goes up.

Be certain that the quote you’re seeing doesn’t demand a driving course you didn’t sign up for. If you want to take the defensive driving course—which is beneficial—no harm, no foul. The course teaches driving skills that could save your life and the lives of others. The savings are also worth it. But be aware of what’s making your auto insurance quote seem so cheap.

Learn how 10 car insurance discounts can lower your premium in a straightforward way.

3. Mistaken Policy Length

Like the payment plan option above, mistaken policy length is also a problem. Say your current auto policy is with Erie Insurance. It’s a 12-month policy that comes with an annual discount. Your rate is $1,400.

A clever GEICO ad runs during the game one night, and you decide to call them up. After you give them your details the quote comes back. You can’t believe the rate you’re seeing. GEICO has slashed Erie’s premium with a nihonto katana blade!

You’ll be paying $795 for the same auto policy! What you didn’t realize is that GEICO only writes 6-month policies. They don’t do the annual thing like Erie. In reality, GEICO comes out higher at $795 times two, or $1,590 for two policy renewals for the year. That’s $190 more than Erie, but all you saw was the mistaken lower rate, which only covered six months.

The reverse is true too. Many times we send a 12-month quote to customers. The annual nature of the quote is marked in a clear way. But the customer only sees the annual rate. They’re used to paying six-month premiums, so the annual rate seems out of hand.

When they realize their mistake, the rate is often lower than what they pay for their current policy.

Believe it or not, this is a common problem with cheap auto insurance quotes. So, verify the length of the quoted policy before getting too excited.

4. Wrong Policy Coverages, Limits, and Deductibles

Another factor can make an auto insurance quote cheaper than others. That is the type and amount of coverage, limits, and deductibles included in the policy. These features have two roles. They determine what your insurance will pay for and how much you will pay out of pocket in case of a claim.

When shopping for auto insurance, you should make sure quotes have the same or similar

1. coverages,
2. limits, and
3. deductibles.

If one quote has lower coverages, limits, or deductibles than another, it may be cheaper. But it will also offer less protection.

For example, one quote may have a liability limit of $25,000 per person and $50,000 per accident. Another quote may have a limit of $50,000 per person and $100,000 per accident. The first quote may be cheaper. But that quote will also expose you to financial risk if you cause a serious accident.

One quote may have a collision deductible of $1,000. Another quote may have a deductible of $500. The first quote may be cheaper. But that quote will also mean you’ll pay more out of pocket if you have a collision claim.

The best way to find the right balance between price and protection is to work with an experienced agent. They can help you understand your options and recommend the best policy for your needs.

Using an Experienced and Trusted Agent Can Lead to Accurate Auto Insurance Quotes

We know how hard it can be to find the best auto insurance quote for your needs and budget. That’s why we want to help you avoid the common mistakes and pitfalls that can lead to cheap but problematic auto insurance quotes.

In short, the problem with cheap auto insurance quotes is simple. They’re not always equal to what you have now. And that is due, in large part, to simple mistakes, omissions, or misunderstandings.

Be aware of the above factors and review quotes with diligence. By doing so, you can avoid getting a cheap auto insurance quote that turns out to be a raw deal. You can also save money and get the best value for your money.

A cheap quote is only as good as the verified information that helped create it. At Horan, we verify everything before we give you a single number.

We have the expertise and the resources to help you find the best auto insurance quote possible. We work with several carriers and can compare different quotes and coverages for you. We can also help you find discounts and savings that you might qualify for.

For a free auto insurance quote and consultation, click the Get a Quote button below. One of our insurance specialists will reach out to discuss your policy options.

We’ve identified the problem with cheap auto insurance quotes. Now learn how to properly compare auto insurance quotes.