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You're required to have car insurance, and you want to spend as little as possible on it. You have a lot of choices in the insurance marketplace, and a little comparison shopping can help you find some real deals. But do these insurers touting cost savings provide the coverage and the service you need? There are a lot of pros and cons of cheap car insurance.

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Pro: You Can Save Some Real Money

Car insurance can be very expensive, especially if you're under 25 or you have a history of accidents. Saving even a few dollars a month could easily result in tens of thousands of dollars over your driving lifetime. Crunch the numbers as you compare policy options, and don't forget to ask about good driver discounts.

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Con: The Company Could Be Scamming You

Not every low-priced car insurance company is a scam, but scammers have a ready market in people who want cheap car insurance. You don't want to file an accident claim and learn that you have no insurance. Tipoffs that you need to do a bit more research include prices that are far lower than anything you've been quoted elsewhere, requests for payment in cash, failure to send you an insurance ID card, and typos in the company's documentation or ads. If the "agent" offers to backdate the policy, that's also a bad sign.

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Pro: Cheap, Web-Based Insurance Companies Often Have Excellent Websites

One of the ways insurance companies can cut costs is by turning a lot of their customer service responsibilities over to their websites. As a result, the sites of these companies are often a breeze to use. You can get quotes, change your coverage, pay your bills, and renew your policies with just a few clicks. You not only save money — you also end up saving time.

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Con: You Could Pay Through the Nose If You're in an Accident

You can bring down your monthly premiums dramatically by opting for high deductibles. And that's fine as long as you're not in an accident. If you have to pay those high deductibles, though, you could end up in a lot of financial pain. Figure out what you can honestly afford in the event of an accident, and set that as your deductible, even if your car insurance company has other options available.

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Pro: A Newer, Smaller Company May Provide Excellent Service

If the reason an insurance company is offering low rates is that they're trying to boost their market share, you might get a great deal without a lot of cons. In this case, you're likely to get excellent customer service. While this situation is rare, you can verify it by doing a little internet research about the company.

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Con: Cheaper Insurance Might Mean Poor Customer Service

If you never have to file an insurance claim, then the quality of customer service probably doesn't matter to you. However, one of the ways cheap auto insurance companies keep their rates low is by slashing their employee costs — and if you have an accident, you're likely to notice. You may have difficulty getting ahold of a customer service rep or claims adjuster. When you finally reach a disgruntled employee, they may not be interested in going the extra mile for you.

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Con: Add-Ons and Fees Could Wipe Out Your Premium Savings

Some car insurance companies that offer low rates charge lots of small fees they fail to mention when you're signing on with them. When you have to pay extra to get your bill mailed to you, or to speak to a representative, or to mail in a check because online payment is unavailable, you may find you're paying more than you'd pay at a company with higher premiums but no added charges. Ask all the questions before you choose your insurance to make sure you understand the bottom line.

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Con: A Company With Low Rates Might Be in Trouble

Sometimes car insurance companies lower their rates to win new customers when the company itself is in financial trouble. An insurance company that's in trouble may stall when it comes time to pay your claim, putting you in financial trouble, too. Do some research before you choose a smaller insurance company to ascertain whether it's on firm financial footing.

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Disclaimer

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