Auto insurance offers essential coverage, yet it is one of the most confusing insurance products. Without the right information, you can end up buying inadequate or wrong coverage for your vehicle. This can devastate your financial situation in case of an accident.
You have multiple types of coverage to choose from and different quotes to compare. When you add misinformation into the mix, buying car insurance becomes a frustrating experience. The saying, 'information is power' might be cliche, but this could save you many problems when purchasing auto insurance. Some of these common misconceptions may lead you to think you have adequate coverage, only to get shocked later.
This post explores some of the most common auto insurance myths out there that might put you at risk when buying coverage.
Color Determines your Car Premium
It is a common misconception among car owners that the color of a vehicle impacts auto insurance costs. For example, it's been rumored that red cars are more likely to be pulled over and, therefore, have a higher premium. Whether your car is red or plain white, this doesn't affect the premium. The insurance company looks at other critical factors, including:
Car make and model
The age of the vehicle
Cost of repairs or car replacement after an accident
Likelihood that theft
When shopping for affordable car insurance, remember that car insurance providers are color-blind.
Credit Score Doesn't Affect Insurance Rates.
Credit scores are now a standard evaluation parameter in the financial industry when selling services. A good credit-based insurance score demonstrates your skills in financial management. For this reason, it affects your insurance premiums.
If you have a low credit score, insurers consider you a high-risk client. The policy provider uses this score to determine if you're likely to file an insurance claim. If you want to enjoy lower auto insurance, start improving your credit score today.
Thieves Don't Steal Old Cars.
Older cars account for the largest percentage of all stolen vehicles in the United States. In 2017 most stolen vehicles in the country were at least a decade old.
These older cars have less advanced security systems, and their parts are in high demand. If you have always felt safer because you drive an old car, it's time to review your auto insurance coverage.
Auto Insurance Costs Go Up As You Get Older
This is a common misconception among car owners, yet older drivers are eligible for multiple discounts. If you are a senior, don't stress over the high cost of insurance. Instead, start shopping for car insurance discounts through older driver programs. For instance, completing an accident prevention course qualifies you for a reduction in car insurance rates (up to 10% for three years).
These mature driving courses assure the insurance companies that you can handle the stress on the road. Defensive driving courses can also qualify you for discounts. If you are a retired driver or you no longer work full time, your insurer can offer discounted rates as you now drive less.
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Auto Insurance Covers Everything
Many car owners have this big misconception about basic auto insurance. They think this covers car theft, flood, fire, vandals, and damage by falling tree limbs, hail, and everything else. If you have always thought that your auto policy covers any type of damage to your car, it's time to get the facts right.
Liability insurance covers you in case you hurt someone or damage their property. On the other hand, comprehensive and collision coverage protects your vehicle.
If you want total protection for your vehicle, you have to purchase comprehensive and collision coverage in addition to your standard car insurance policy. For an older car or one worth less than $1000, purchasing all this coverage may not be cost-effective.
Minimum Amount of Auto Liability Insurance Required By Law Is Adequate
Auto insurance is essential for any car on the road. However, many car owners still consider it an unnecessary expense and look for tactics to avoid it. Many car owners purchase the minimum amount of coverage required by law and argue this is enough.
This is a myth that has grown with time. Many states set minimum auto insurance as liability insurance up to specific limits. This is just a starting point of your coverage, and you shouldn't stop here for your own good. In the case of an accident, you might be forced to pay more out-of-pocket, and this can set you back financially.
Severe accidents are costly, and if you don't have adequate coverage, you might be forced to go into debt or have your assets attached. The escalating cost of medical expenses, lawsuits, and vehicle repairs can ruin you financially. For this reason, extending coverage beyond state limits is one of the smartest financial decisions you can take.
Auto Insurance of a Different Driver Covers Damages in Case of an Accident
Whose insurance covers damages in the case of an accident? If you're the car owner, your insurance is the primacy coverage to pay medical bills or damages. There's a misconception that whoever was behind the wheel takes responsibility in the case of an accident. While this is true in criminal proceedings, the car owner's insurance is the one that pays for damages during an accident.
Men pay more for insurance than women.
The debate on who's a better driver has for long dominated the motoring industry. With time, it has become a hot topic in the insurance industry as many car owners believe providers favor women drivers. If you believe that men pay more for insurance than women, you've fallen for one of the biggest insurance myths.
One of the factors that fuels this misconception is the fact that made drivers under 25 years may fall under the risky drivers' category. It is their age and not the gender that influences the insurers' decisions in this case. Across other age groups, gender is not a consideration.
All factors being equal, a woman driver can pay more than a male one in the same profile. Many other factors come into play when assessing the risk of an individual driver. From their income levels, driving history, credit score, to marital status, these are more solid factors an insurance company considers.
Some states such as including California, Massachusetts, and Pennsylvania, have banned the use of gender as a metric to calculate driver's insurance premiums. If you are a male driver shopping for auto insurance, you have a chance to get cheap rates just like women drivers.
"No-fault insurance means it's not my fault!"
No-fault auto insurance caters for all medical bills of the driver and passenger in case of an accident. It is unique because such payments are regardless of who's at fault. In states with no-fault laws, you need to buy personal injury protection (PIP) as part of your auto insurance policy. But does "no-fault" translate to "it's not my fault?"
There's a misconception that a no-fault gives you a clean pass after an accident. Well, your insurer will pay for all the damages, but if you are responsible, there are some consequences. The first impact is on your insurance rates, which will go up.
In the strict usage of no-fault, this is where insurance companies pay first-party benefits, but there are also restrictions on the right to sue. While these restrictions exist, drivers in no-fault states can still sue for severe injuries if the accident meets certain conditions.
Your insurance company might have paid for damages but don't be surprised if you're slapped with a lawsuit if a third party's case meets the required threshold. If your state requires no-fault insurance, talk to your insurance agent and understand this type of auto coverage fully.
Expensive Cars Cost More To Insure
If you upgrade to a higher cost car, you expect insurance rates to rise, right? If this is what you believe, you're not alone. It is one of the most popular myths in the auto insurance market. However, the price tag of your vehicle isn't the first thing an insurance company looks at.
The primary considerations include the cost of repairs for your vehicle and the vehicle model's loss history. The insurer will consider the number of claims for your car model rather than look at the price tag.
For instance, a $35,000 with a high number of claims will cost more to insure than, say, a high performance worth $55,000, which isn't attractive to car thieves. Some mid-priced vehicles could have higher insurance premiums due to high loss history and costly repairs.
If you are in the market for car insurance, there's a lot of information available to help you make the best choice. However, you have to sift through this information to get the facts. Avoid some of these myths, which can mislead your decision when purchasing an auto policy. Remember that the wrong choice of auto insurance coverage has debilitating consequences in case of an accident.
At Policy Scout, we appreciate the process of buying auto insurance is complicated. We help you find custom coverage to suit your needs. Get the best car insurance quote today with our PolicyScout's free quotes wherever you are. We make your search for cheap auto coverage fast, easy, and hassle-free.