Car insurance can be quite complex and often times difficult to understand. With all the information available to policyholders, it can be challenging to decipher the facts from myths. Knowing what’s covered under your auto policy and the factors that determine your premium is crucial. What’s more, not understanding your coverage may lead you to believe you’re covered when that may not be the case.
To help clear up any misinformation surrounding your auto insurance policy and put your mind at ease, provided below are 8 common car insurance myths debunked.
8 Car Insurance Myths
Your Credit Score Has No Effect on Your Insurance Rates
An individual’s credit score is a significant factor insurers consider when determining your premium.
Your credit score can show insurance agents how well you manage your finances and how likely you are to file an insurance claim. People with good credit tend to pay less for their car insurance since they’re seen as low risk.
The Minimum Amount of Liability Coverage Required by Your State Is Enough
Although purchasing the minimum amount of coverage required by law may reduce your premiums, you may pay more out-of-pocket in the event of an accident. In many cases, it is advisable to select limits that are above your state’s minimum requirement. Severe accidents can be very costly when you consider the rising cost of medical expenses, court settlements and vehicle repairs.
Insurance Will Pay For a New Car if Yours Gets Totaled
You insurer will take into consideration your car’s depreciation and several other factors when they reimburse you. Depreciation is the decreased value of an item over time or wear and tear. Depending on your coverage, you may get money for your totaled vehicle. However, it will most likely not equal the original purchase price.
Personal Auto Insurance Provides Coverage for Business Use
If you were to get into an accident while working, your personal auto insurance will probably not cover it. You need to have separate coverage if you’re driving your personal vehicle for business. If you’re using your vehicle for work or driving for a rideshare service like Uber or Lyft, you should check with your insurance agent to confirm that you’re properly insured.
If Someone Else Is Driving Your Car and Gets into an Accident, Their Insurance Pays for It
There is a common misconception that whoever gets your car in an accident has to cover the damages. However, the insurance held by the owner of the vehicle is typically considered the primary insurance in the event of an accident. So, regardless of who was driving when the incident occurred, the vehicle owner’s insurance is what will serve as the primary coverage to help pay medical bills or damages.
The price tag on your vehicle doesn’t necessarily determine your insurance costs. However, how much your vehicle costs to repair, the vehicle model’s loss history and other characteristics can influence your premium. If your car model is associated with more accidents or traffic infractions, or is costly to repair, it may be more expensive to insure.
Many believe that buying a certain colored vehicle will have an impact on their insurance. Meaning, they’ll pay more to insure a vehicle in certain colors than others.
However, that’s not true at all. When insurance companies are factoring your car into your insurance policy, they’re looking at the other components of your vehicle, such as:
- The vehicle’s safety features and ratings
- The vehicle’s make, model, year, body type and engine size
- The likelihood that the car will be stolen or vandalized
- The cost to repair or replace the vehicle following an accident
Getting into an Accident Will Automatically Increase Your Rates
Getting one or two tickets for minor violations won’t necessarily increase your premiums. However, how much your vehicle costs to repair, the vehicle model’s loss history and other characteristics can influence your premium. If your car model is associated with more accidents or traffic infractions, or is costly to repair, it may be more expensive to insure.
Get Professional Help
You must never underestimate the value of a reliable insurance company. Thus, it would be best to contact an insurance expert to learn about the ins and outs of car insurance and find coverage that works for you.