Should I Get Free Auto Insurance for My Car?
Auto dealers sometimes offer free car insurance as a promotion. It sounds like a good deal, but is it right for you?
Along with rebates and 0% or low-percentage financing incentives, car dealerships and manufacturers sometimes throw in free car insurance for buyers. Free auto insurance policies usually provide bare-bones coverage. When it is offered, it rarely covers more than whatever the state-mandated liability limits are.
The practice of offering free car insurance has been prohibited in many states, which should be an indicator of the overall value of such policies. While free auto insurance sounds enticing, it may not be your best option. This article will cover:
Is free auto insurance worth it?
The value of a free car insurance policy falls squarely into the category of "better than nothing". When offered, it usually only covers your state's minimum liability limits. This typically includes:
- Bodily injury liability: This insurance provides coverage for medical bills, court costs and lost wages in the event of an auto accident that you are responsible for.
- Property damage liability: This coverage is for repair or replacement costs due to any damage you cause to public or private property in a car accident.
Minimum auto liability requirements vary from state to state, but the important thing to know is that there's a big difference between the liability insurance that's required and the liability insurance that you need. State liability limits are rarely updated and don't necessarily reflect the costs that can result from an auto accident.
Take North Dakota's required auto insurance limits. State law requires drivers to have $50,000 in total bodily injury liability. While this may seem like a lot of money, a long hospital stay or extended legal case after a car crash can easily eat through that limit. Once your liability coverage is hit, any costs that accrue afterward come out of your pocket. Free auto insurance deals from auto dealerships and manufacturers rarely allow for increases in the insurance limits offered. This may put you in a rough financial position in the event of an expensive auto accident.
Also, these auto free insurance offers almost never allow you to choose your own insurance company. This means that you have to go with the provider that the dealership or manufacturer chooses. Going with these offers can easily exclude you from discounts and other benefits another insurer could provide.
Finally, if you're purchasing a car through a lender or leasing a car, then a free auto insurance policy will probably be insufficient for your finance or lease agreement. Lenders usually require collision and comprehensive coverages in order to protect their investment in your vehicle. Again, these free auto insurance deals rarely provide for additional coverage beyond the state minimum. This would make such a policy useless in a lender's agreement.
How do I get free auto insurance?
From time to time, auto manufacturers and dealerships offer promotions to sweeten the deal for buyers. While incentives such as 0% financing and rebates are more common, some auto dealers and manufacturers in states where the practice is legal offer free auto insurance coverage through an insurer they have a deal with. This coverage often has a one-year limit.
What other options for auto insurance do I have?
If your budget is an issue, you have other choices for finding affordable auto insurance that fits your personal needs:
- Compare quotes: One of the best ways to find an auto insurance policy in a price range you can afford is to get quotes from multiple insurers. The auto insurance industry is highly competitive. Providers are constantly striving to one-up each other in regards to premium price and coverage offerings. The more car insurers you look at for quotes, the better your chances of finding your best, affordable policy.
- Look into discounts: Auto insurance companies offer a large number of discounts to help cut down premium costs for their policyholders. Talk with different companies to see what discounts you qualify for. You may be able to save a significant amount on your annual rate.
- Raise your deductible: In most cases, the higher your auto insurance deductible, the lower your premium. Look at your driving habits and consider the highest deductible your budget could handle in the event of filing a claim. Going this route may bring your annual auto insurance premium to a reasonable level.
- Government-subsidized insurance: If you live in California, Hawaii or New Jersey, you may qualify for low-cost or no-cost auto insurance for low-income families. These plans tend to be very tightly regulated and are often prioritized on the basis of need. Check with your state insurance department to learn more details.
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