The True Cost of Auto Insurance

Like most consumers cost is probably one of your main concerns when buying your auto insurance and that is understandable.  In fact the “True Cost” of your auto insurance; which is a combination of your premium, deductible, and any coverage gaps should be considered before making your final buying decision.  By just focusing on what your six month or annual premium is, you could be putting yourself at risk of paying 100s if not 1000s of dollars in addition to your premium in the event of an accident.  I am surprised by the number of people I talk with on a regular basis who are driving around with coverage gaps and don’t even know it.      

Here’s an example, if you have a top of the line auto insurance policy with a premium of $1300 a year, a $1000 deductible, and no coverage gaps; your true cost of insurance is $2300.  Let’s take a look at the “True Cost” of your insurance, if you have a policy that cost a $1000 a year with the same $1000 deductible but you have a $25,000 coverage gap.  The “True Cost” of your auto insurance is now $27,000 ($1000 premium + $1000 deductible + $25,000 coverage gap).  Is lower cost auto insurance a good value, if when you need it the most you find out you didn’t have the protection you really needed?

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