Mark Roman | August 17, 2017 | Insurance Companies
Cut Rate Auto Insurance: You Get What You Pay For
As attorneys handling auto accident cases, we spend a lot of time dealing with auto insurance companies. One of the worst things we see is clients being left high and dry by cut rate auto insurers. It’s sad but true, it seems, that you get what you pay for when you buy car insurance.
Many consumers are tempted by small auto insurance companies offering low rates for minimal coverage. Their policies are typically sold through independent insurance agents who operate small storefront agencies.
Paying less for insurance may seem smart for your checkbook, but the experience quickly turns sour when you make a claim. We’ve seen these insurance companies drag their feet for weeks or even months before paying straightforward vehicle damage claims. Usually, they justify this by saying they need to “investigate” a claim, even when their driver is clearly at fault for the accident. Meanwhile, the innocent person who had their vehicle wrecked is stuck with no transportation and no rental car.
Bargain basement companies often refuse to pay no-fault medical benefits as well. The law requires these benefits to be paid within 30 days, but these insurance companies sometimes sit on bills for months. We often have to threaten to sue them before they start putting the bills in line for payment.
This isn’t even the worst of it. The greatest weapon in the cut rate insurance playbook is to not pay claims at all. When they got notified about a claim, these insurers go back and try to find any error made during the insurance purchasing process. If they find one, they immediately rescind the entire insurance policy and refuse to pay anything.
The errors they look for often involve listing household residents on application forms. Customers may think people in their home who don’t drive need not be listed on an application. Insurance agents are supposed to prevent this by making sure the information they gather is accurate, but many don’t really go over the applications with their customers carefully. As a result, an elderly parent or young teenager might be missed. Fluid living arrangements can also create confusion as family members come and go over time.
This sounds innocent enough, but insurance companies play “gotcha” with this type of information and use it to deny coverage completely. This sounds crazy and completely unfair, but it happens every day. Some people involved in accidents who thought they were saving money on coverage end up with no coverage at all.
Based on this, we urge everyone buying insurance to read their insurance applications and make sure they’re accurate. Don’t ever let an agent fill one out for you without you looking it over. And when you’re buying auto insurance, stay away from the low rate storefront companies too. The worst time to find out you were penny wise and pound foolish is after you make a claim.
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