If we’re not careful when we hear a false fact about auto insurance that we believe to be true and repeat it, we’ve just created a myth. And, myths have a tendency of not being entirely true and can often steer people in the wrong direction, especially if it’s about auto insurance coverage. Repeated enough times, a myth that’s untrue can easily become part of everyday conversation. That’s why – understanding the factors that affect your premiums as well as pointing out the ones that may not be true is just as important.
The following are some of the most obvious untrue statements that you may have heard while standing at the water cooler.
1. The color of your car determines your insurance rates
Regardless of what you may have heard in the past, the color of your car has nothing to do with what you’ll pay. It doesn’t matter if your car is red, white, or painted in camouflage…your auto insurance company isn’t interested. What does matter to them is the type of car you own. They’ll ask you for the make, model, body style, engine size, and year of the vehicle. In addition, they’ll want to know the age, driving record, and credit history of the driver of record for the policy. Unless you want to volunteer the fact you drive a red car…keep it to yourself.
2. Older drivers pay more for insurance
On the contrary, it’s usually the opposite. If you happen to be 55 or older with a good driving record, odds are you’ve qualified for a reduction in auto insurance rates. Similarly, if you’ve completed an approved defensive driving or accident prevention course through a local or state agency and AARP, you’re often eligible for a discount.
3. Your credit history means nothing
While the practice of using your credit history to determine how much you’ll get dinged on your auto insurance rates is illegal in some states, such as California, it is still used by many insurers across the nation. And, if your past finances are in shambles, it could affect the rate you’ll pay for your auto coverage.
4. If your vehicle is stolen, vandalized, or damaged by a falling tree, it’s automatically covered
Comprehensive and collision are optional coverages. So, it depends completely on whether you have full coverage on your vehicle or not. If you’re covered by the bare minimum required by the state and your car is totaled…you’re going to be a candidate for public transportation. Your car would be nothing more than a two-ton piece of lawn art. The situation is the same if your car is stolen or vandalized. The lone exception would be if you drive a newer vehicle that’s being financed. Lenders require you to purchase comprehensive and collision coverage as part of the loan agreement. In which case, you have no choice.
5. The state required minimum auto liability is more than enough
This is where a lot of drivers go wrong. In truth, more is better. Accidents quite often end up costing in excess of minimum liability requirements. You could find yourself having more to pay out-of-pocket for losses than you have available, which could result in a lawsuit that could ruin you financially. Both the auto insurance industry and consumer groups suggest minimums of $100,000 in bodily injury protection per person and $300,000 per accident.
6. If someone borrows my car, their insurance covers everything if they get in a crash
Because in most states the policy covering the vehicle is regarded as the primary insurance, your insurance company could be forced to pay for all damages, which will likely cause your annual premium to go up substantially. Friendship aside, you may want to reconsider tossing anyone your car keys until you familiarize yourself with your policy and state insurance laws.
7. Military personnel pay more for auto insurance
Truth is – regardless of the branch you’re in; you qualify for a discount on your car insurance. All you need is documentation to verify your eligibility. Some insurance companies may also offer discounts to former military personnel as well as their family members.
8. Whether I drive for business or pleasure my personal insurance policy covers me
This is not necessarily true. If you’re self-employed and using your personal vehicle for business without your insurance company knowing, it could create an unpleasant outcome should you have an accident. Your insurer could deny your claim, due to the simple fact that they understood you only drove your vehicle to and from work…not to make deliveries. To avoid any unnecessary problems in the future, you may want to consider getting business related coverage.
In the end – don’t always believe everything you hear about auto insurance. It could just be untrue.
Get around what may be untrue by checking for yourself that you’re getting the best rate on your auto insurance. Why not get a free auto insurance quote today?