The Secret of Cut-Rate Auto Insurers

“The bitterness of no coverage is remembered long after the sweetness of low price has been forgotten.” These wise words from insurance educator Jon Eubank , CPCU, ARM, perfectly exemplifies the problem with cut-rate insurers. Saving 15% in 15 minutes could cost you thousands (or more) from denied claims!

Bill Wilson, Big “I” associate vice president of education and research and director of the Big “I” Virtual University has made a 12-point list of common cut-rate auto insurance exclusions and coverage limitations that would otherwise be covered by a standard insurer:

  1. Undisclosed Household Residents Are Excluded. How many of you have ‘boomerang’ kids who came back to live at home?
  2. Business Use of Non-Owned Auto Is Excluded. Have you ever borrowed a neighbor’s car or made a business stop in a dealer loaner auto?
  3. Business Use of Any Auto Is Excluded. Do any of you ever run to Staples or the post office on company business?
  4. Use of Any Non-Owned Auto Is Excluded. Better not drive anyone’s car but your own.
  5. Vehicles Over 10,000 Pounds In Gross Value Weight Are Excluded. Have you ever rented a U-Haul truck or an RV thinking your liability coverage extended to the rental?
  6. Any Type of Delivery Is Excluded. Denied claims include pizza, newspapers, Mary Kay cosmetics, etc. are not covered
  7. Permissive Users Only Get Minimum Limits. This can apply to people who borrow your car or even unlisted household drivers.
  8. “Street Racing” Is Excluded. Google “street racing” and see how often people are killed or critically injured in the process.
  9. Criminal Acts Are Excluded Or Limits Are Reduced. DUIs or even speeding tickets may preclude coverage!
  10. Medical Payments Only Include Licensed Physician Fees. One insured incurred a $25,000 “life flight” helicopter fee that would not be covered, even in part, by a cut-rate policy with this exclusion.
  11. Theft Without Evidence of Forced Entry Is Excluded. One insured had a four-figure vehicle-theft loss denied because he left his keys in the car.
  12. Sales Tax Is Not Covered Under Loss Settlement. This cost one “same coverage” insured more than $2,000 out of pocket for sales tax on a replacement auto.

Most people never read through their insurance policies. For those with standard insurers (though it is inadvisable), it often turns out alright. However, for those buying insurance through a cut-rate insurer, do you really know what you’re paying for? Odds are that your cheaper price comes with a lot more exclusions and limitations. Think through it logically—you just can’t sell the exact same thing for a lesser price.

The 12-point list was adapted from Bill Wilson’s article ‘Price Check’ that was featured in ‘ia: Insight + Analysis For The Independent Agent’ magazine’s July 2014 issue. To find out more about how insurance isn't a commodity, you can visit

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Colten Zamrzla, CPCU

Colten first started in the insurance industry in 2010. He then pursued a Bachelor's degree in Finance & Insurance from the University of Nebraska at Lincoln. Once graduated, he immediately started studying for the CPCU and achieved it in just shy of a year. He is solely focused on commercial insurance, able to assist all types of businesses and nonprofits in risk management.

Colten has dedication and passion for his clients and the insurance industry as a whole. He dedicates time to furthering his knowledge on all things business and insurance, and he volunteers for the Independent Insurance Agents of Nebraska, a state-based trade association.