8 common misconceptions about vehicle insurance
Know the facts to get the most out of your auto insurance budget.
Automobile Insurance
ABOUT THIS ARTICLE
Myth 1: The cost of vehicle insurance is determined by the color of the car.
Myth 2: As you become older, it becomes more expensive to insure your automobile.
Myth 3: Your credit score has no bearing on your insurance rate.
Myth 4: If your automobile is stolen, vandalized, or damaged by falling tree branches, hail, water, or fire, your insurance will cover you.
Myth 5: You simply need the bare minimum of motor liability insurance to comply with the law.
Myth 6 – If another individual drives your car, his or her auto insurance will cover the damages in the event of an accident.
Myth 7: Soldiers have to pay more for insurance than civilians.
Myth 8: Personal auto insurance covers the commercial usage of your vehicle.
It is critical to understand the elements that influence your insurance prices and coverage when selecting a vehicle policy. Unfortunately, a lot of erroneous information masquerades as “common wisdom”—here, we distinguish fiction from reality concerning vehicle insurance.
Myth 1: The cost of vehicle insurance is determined by the color of the car.
It makes no difference if your automobile is “Arrest Me Red” or “Hide In Plain Sight White”—the color has no bearing on your auto insurance premiums. The cost of your auto policy is determined by a variety of criteria, including the car’s make, model, body style, engine size, and age, as well as the car’s sticker price, repair costs, as well as its general safety record, and danger of theft. Insurers also consider the driver’s age, driving record, and, in some cases, credit history.
Myth 2: As you become older, it becomes more expensive to insure your automobile.
On the contrary, elderly drivers may be eligible for special reductions. Those over the age of 55, for example, can receive a discount on their vehicle insurance rate if they successfully complete an accident prevention course (available through local and state agencies as well as through the AAA and AARP). Retirees and individuals who are not employed full-time and hence drive less may also be eligible for a vehicle insurance discount. Programs and savings for older drivers differ by state, insurance company, and driver.
So, if you believe you could be eligible, talk to your insurance agent.
Myth 3: Your credit score has no bearing on your insurance rate.
Your credit-based insurance score, which is based on your credit history, may be important. A strong credit score reflects how effectively you handle your financial affairs and has been proved to be a solid predictor of whether someone is more likely to file an insurance claim, therefore many insurance companies consider it when purchasing, changing or renewing your vehicle insurance coverage. People with high credit, and hence good insurance ratings, frequently pay less for insurance.
Myth 4: If your automobile is stolen, vandalized, or damaged by falling tree branches, hail, water, or fire, your insurance will cover you.
This is only true if you add comprehensive and collision coverage to your base insurance. If your automobile is worth less than $1,000, or less than ten times the insurance rate, obtaining these coverages may not be financially effective—but you do need collision and comprehensive insurance to completely protect your vehicle from all forms of damage.
Myth 5: You simply need the bare minimum of motor liability insurance needed by law.
Almost every state requires you to get a minimum level of car liability coverage, but purchasing only the minimal amount of liability means you will likely pay more out-of-pocket for damages sustained after an accident—and those expenses may be significant. In general, the insurance industry and consumer groups propose a minimum of $100,000 in bodily injury coverage per person, and $300,000 per accident is required. If you have significant personal financial assets to safeguard in the case of a lawsuit, you may want to think about purchasing umbrella liability insurance.
Myth 6 – If another individual drives your car, his or her auto insurance will cover the damages in the event of an accident.
In most jurisdictions, the main insurance is the auto insurance policy that covers the vehicle. This implies that regardless of who is driving, the automobile owner’s insurance company must pay for any damages caused by an accident. Policies and legislation vary by state, so be sure you understand the requirements before letting someone else drive your automobile.
Myth 7: Soldiers pay more for insurance than civilians.
If you are a member of the military, regardless of branch, you are eligible for a discount on vehicle insurance. You’ll need to provide documentation that includes your name, rank, and the date you’ll be recruited into the military (in some situations, you might be able to have your commanding officer make a phone call on your behalf). Shop around—some vehicle insurance companies provide discounts to retired military personnel and their families.
Myth 8: Personal auto insurance covers the commercial usage of your vehicle.
Personal auto insurance may not cover you if you are self-employed and use your vehicle for business reasons, thus it is critical to buy business vehicle insurance. If you have other individuals, such as staff, using your car, make sure to check on them on a frequent basis.
