10 Myths About Auto Insurance

3 minute read

Addressing Some Common Auto Insurance Myths

woman in a car with keys in her handToday, you have the ability to go on the Internet and obtain a great deal of information about auto insurance. But that doesn’t mean everything you read is true. In fact, there’s a lot of misinformation floating around in cyberspace.

With that in mind, let’s bust ten commonly-heard myths about auto insurance.

1. Insurance rates always rise after a claim or traffic ticket. If you changed the word “always” to “typically,” then the statement would be true. But if you have a clean driving record, it’s possible that a single citation or minor accident won’t lead to a change in rates.

2. New cars will cost you more to insure than older ones. It depends on the vehicle. A new economy car with lots of safety features might carry a lower premium than a five-year old, high-powered sports car.

3. Less expensive cars are less expensive to insure. Again, make and model are more important factors. For instance, if a car has a lower sticker price but is stolen more often than a sport utility vehicle, then the SUV may cost less to insure.

4. Thieves tend to target newer cars, which means they are costlier to insure. Not really. Certain cars are more popular with car thieves because their parts are worth more money on the black market. That’s what insurance companies look at when setting rates.

hands holding a house showing home insurance5. Insurance rates are unaffected by factors like marital status and home ownership. Statistics show that married drivers and homeowners are typically involved in fewer accidents than their unmarried and renting counterparts. What’s more, adding a home or second vehicle to your policy helps you qualify for multi-policy discounts.

6. Full coverage means coverage on everything. The word “full” actually means “great, but not absolute.” In fact, full coverage may exclude things like rental car insurance, gap coverage, emergency road service, and uninsured motorist coverage. If you want these coverages, be sure to ask if they are included in your policy.

7. Auto insurance covers items inside your vehicle. If your car is stolen and your laptop is inside it at the time, or someone T-bones you and breaks a TV that’s in your trunk, those items likely aren’t covered by your car insurance (though they might be under your homeowners’ or renter’s policy).

woman in a car yelling out of the window to uninsured driver8. You never need coverage for uninsured or underinsured motorists. Not true, and in some cases it may be a good idea. California is a tort state, meaning that the driver responsible for an accident pays all damages. But if that driver doesn’t have insurance (as is the case for 15% of California drivers), then your policy may not cover all the accident costs. This is where uninsured or underinsured motorist coverage would protect you.

9. Members of the armed forces pay more for car insurance than civilians. In fact, all military members qualify for an auto insurance discount. And if they are deployed overseas, they won’t be driving their vehicle as much, so their premiums will likely be lower anyway.

10. Car color impacts your auto insurance rates. You may have heard that red vehicles carry higher premiums because their drivers get more tickets, or black cars cost more to insure because they’re harder to see at night and are therefore involved in more crashes. But since no hard data exists to prove these assertions, color is not a factor in setting insurance rates.

This content is offered for educational purposes only and does not represent contractual agreements. The definitions, terms and coverage’s in a given policy may be different than those suggested here and such policy will be governed by the language contained therein. No warranty or appropriateness for a specific purpose is expressed or implied.