10 common car insurance myths busted
When it comes to car insurance you need to know the facts from the fiction or you could find yourself overpaying, or worse — without the cover you are required to have by law. Read on to find out the truth behind 10 common car insurance myths.
10. You’re Not Responsible for Any Damage if Someone Else Drives Your Car!
Starting off our Myth-Busting Countdown at Number 10: Car Insurance Follows the Car, NOT the Driver! Don’t be fooled into thinking that if someone else drives your car and causes an accident, their insurance will cover the damages. In reality, your policy will be the primary insurance, and your friend’s policy will only kick in if the limits on your policy were exceeded. Be aware that some policies may have driver exclusions, which means that no one else is covered to drive your vehicle. Before you lend your car to anyone, make sure you understand the specifics of your policy to avoid any costly surprises!
9. Different Colors Mean Different Insurance Rates? Don’t Be Fooled by This Common Misconception
The Color of Your Car Doesn’t Determine Your Car Insurance Rates, Despite Popular Belief! It’s commonly thought that driving a flashy red car puts you at risk for reckless driving and higher premiums. But hold on, because this is just a myth. Car insurance companies typically do not take into account the color of your vehicle when determining your insurance rates. Even if you have a custom paint job, the extra cost isn’t because of the color, but rather the uniqueness of the paint itself. So, whether your car is red, blue, or green, don’t let this myth fool you into thinking you’re paying more for insurance than you should be!
8. New cars are more expensive to insure
The Truth About New Cars and Insurance Rates! Are Newer Cars Really More Expensive to Insure? While there is some truth to this myth, it’s not as straightforward as you might think. New cars often come equipped with advanced safety features that can lower your risk of accidents and serious injuries, leading to lower insurance rates. Plus, new car owners may be eligible for discounts on their insurance premiums. However, newer cars are typically more costly to repair or replace, which can increase insurance rates compared to older models. Additionally, new cars often require more comprehensive and collision coverage, resulting in higher premiums. The age of your car impacts your insurance rate in various ways, and it’s not as simple as assuming that newer cars are always more expensive to insure. Let’s dive deeper into the nuances of car insurance rates and car age!
7. Your Insurance Rates Won’t Be Affected By an Accident That Wasn’t Your Fault
If the coverage of the other driver covers all the expenses and you don’t file a claim with your insurance provider or settle the matter privately with the other driver, then it’s likely that you won’t face any repercussions. However, if you do file a claim with your insurance company, even if you’re not responsible for the accident, there’s a possibility that your premium may go up. While it’s unfair to be penalized or charged extra for a claim that isn’t your fault, it’s possible that you may lose your claim-free car insurance discount, which could result in a higher premium.
6. All car insurance companies are the same
Contrary to the belief, car insurance companies are not all the same. While they may offer similar coverage, there are several factors that set them apart. Each company has its own unique rating system, which means that you may receive different rates for the same coverage. Moreover, different insurance companies offer different endorsements, with some providing more specialized options such as ridesharing insurance while others offer common add-ons like car rental and roadside assistance coverage. Similarly, while most insurance companies provide standard discounts, some may offer more unique savings. Additionally, some companies have local agents, while others operate entirely online. Finally, third-party customer satisfaction scores and financial strength ratings vary widely among companies, which can help you form a well-informed opinion about a carrier.
5. The price you are quoted is the amount you will be charged
A quote is not set in stone and is subject to change. When obtaining a car insurance quote, insurers typically base it on the information you provide. However, if the information provided is inaccurate, the quote may change when you are ready to purchase the policy. Insurance companies typically pull two reports, namely the Comprehensive Loss Underwriting Exchange (CLUE) report and the Motor Vehicle Record (MVR), before presenting you with the final price and allowing you to purchase coverage. These reports contain your insurance claim and traffic incident history. If you failed to disclose this information accurately in your quote or omitted it entirely, you may experience a price increase when presented with the final quote
4. Having minimum coverage is sufficient
Although state minimum coverage is sufficient to meet legal requirements, it may be inadequate depending on your circumstances. If you have financed or leased your vehicle, you will most likely be required to purchase full coverage. Even if you own your vehicle outright and could legally drive with minimum coverage, it is advisable to consider purchasing higher liability limits to gain better financial protection. The additional cost is usually not substantial, and it provides you with significantly more coverage.
3. Full coverage covers everything
The term ‘full coverage’ refers to a policy that includes comprehensive and collision coverage, which protect your vehicle from various damages. However, it is important to note that having a full coverage policy does not mean you are protected against all possible scenarios. For instance, intentional damage is generally not covered. Additionally, your policy may have limitations on who can operate your vehicle, what types of vehicle usage are covered, and which countries your vehicle is insured in. When discussing your coverage with an insurance agent, it is essential to clarify the policy’s coverage options. Every person’s interpretation of full coverage may vary, and it is crucial to ensure that your policy meets your expectations.
2. If you have health insurance, medical payments coverage aren’t necessary
If you are looking to cut down on your car insurance expenses, you may be tempted to skip medical payments coverage, especially if you already have health insurance. However, this may not be a wise decision. Medical payments coverage pays for your and your passengers’ medical expenses in the event of an accident, regardless of who is at fault. In some states, personal injury protection (PIP) is a required alternative to medical payments coverage. Even if you reside in a state where these types of coverage are optional and have health insurance, it is still advisable to consider purchasing the available option. Your health insurance policy may have limitations that leave you with additional expenses. Medical payments coverage may also assist in covering your health insurance deductible. Moreover, in states where PIP is available, you may receive additional benefits beyond medical bills, such as assistance with childcare expenses, household duties, or lost income.
1. You can negotiate your premium
Contrary to popular belief, negotiating your car insurance premium is not possible. Insurance companies use their own algorithms to determine your risk level and calculate your rate. If you receive a lower rate from another company, it means their algorithm views you as a lower risk, but you cannot use that lower quote to negotiate with other carriers. However, you can still lower your premium by choosing suitable coverage and taking advantage of discounts.
The bottom line
Understanding the intricacies of car insurance can be daunting, leading to the spread of myths and misconceptions. Being aware of the truth about car insurance is crucial in making informed choices about your coverage. Armed with this knowledge, you can dispel common car insurance myths and help others make better-informed decisions.