Myths, misconceptions, misinformation and assumptions. The four killers of facts. Auto insurance can be confusing as it is, and if you throw myths into the mix, you can understand why many drivers overpay or end up grossly unprotected.
If you don’t have the right information, purchasing car insurance can be a nightmare, more so if you go with the same misinformation many people believe.
Do you want the best auto insurance deal in town? Don’t go with what friends and family tell you. To find the cheapest insurance for your car, consult a trusted insurance agent.
But before all that, let us separate fact from fiction. In today’s post, we bust 7 common car insurance myths that are keeping you confused about auto insurance.
Without further ado, let us start.
7 Stupid Auto Insurance Myths That Are Bleeding Your Wallet Dry
There are many car insurance myths doing the rounds, and it’s appalling how we swallow them hook, line and sinker. In the next section, we only cover the 7 most common, so please share in the comments if you know of other car insurance myths that irk you.
Myth 1: The Color of Your Car Affects Your Auto Insurance Premiums
The above myth is one big fat lie, which we seem to gulp at any given chance without hesitance. Whoever came up with the idea must be laughing at all us for the baloney that it is.
The truth is the color of your car has no impact on your car insurance rates. No impact at all; none whatsoever. It’s all nonsense.
It doesn’t matter whether your car is red, the color of danger, or green, the color of safety. To determine your premiums, insurance firms look at other rating factors including safety features, car model, loss history, and the cost of repairs in the event of an accident.
There is one caveat though. If you’d like your auto insurance company to cover a pricey custom paint job, ensure you include coverage for vehicle customizations in your policy. Otherwise, your colorful decals and custom paint job won’t be covered.
Myth 2: My Friends Are Responsible for Damages Since They Crashed My Car
Your friend is a friend for many reasons, and borrowing your car is no big deal. You’ve probably borrowed cars from each other severally because, “what are friends for?”
But now your friend caused an accident, which sadly involves your car that he/she borrowed earlier today. And just like many who believe the above myth, you are ready to crucify him/her for the damages.
They crashed your car, so they should pay for it, right? Wrong. At least when it comes to insurance companies.
Auto insurance follows the car, not the driver, but this might vary, so check with your insurance firm. All the same, your insurance pays for the damages to the agreed liability limits if a friend/relative is involved in an accident while driving your car.
If your insurance doesn’t cover for the costs, you are on the hook, and you can only hope your friend’s car insurance will come to play.
Myth 3: You Pay More to Insure an Expensive Car
Another big lie and it’s utter nonsense. As we mentioned earlier, insurance companies look at other factors while calculating your auto insurance premiums. They don’t consider the sale price of your car at all.
Rather, they consider the cost of repairs, loss history, model and safety features. If a $30,000 van costs more to repair than a $50,000 SUV during an accident, you will pay more to insure the van than the SUV.
Main takeaway: If your car model has an history of costlier claims, you will pay higher car insurance rates than the next guy who owns a pricier car model that has cheaper claims. It’s never about the sale price of the car. I hope that makes sense.
Myth 4: Personal Auto Insurance Covers Personal and Business Use of My Car
Many people believe their personal auto insurance covers for all incidents involving their car no matter how the vehicle was being used when the accident occurred.
You couldn’t be more wrong; personal auto insurance covers your car if you’re involved in accident when you’re using the car for personal use, and only that.
If you will use your car for business purposes, you should look into investing in additional coverage for said purpose. Otherwise, your insurance won’t cover for damages if your car is involved in an accident while you’re using it for commercial purposes including providing Uber services.
If you will use your car to haul supplies and perform other business-related duties, you must insure the vehicle for business use. Sadly, there is no way around that.
Myth 5: Thieves Don’t Steal Old Cars, So I Don’t Need Comprehensive Insurance for Theft
This myth is actually laughable. If you don’t think you need comprehensive insurance for theft because you have an old car, do you even exist? You must literally live under a rock.
Well, there are no hard feelings because it’s a myth and it’s easy to see why many people would think that way. After all, we all want to believe thieves only target new and expensive cars. Why would they steal your old jalopy?
In reality, thieves have a soft spot for older hence popular cars. They don’t steal the car to resell. The thieves usually steal older cars for the spare parts, and it’s a huge business. Don’t believe me? Here is a list of the most stolen cars published on Forbes.
There is a huge demand for spare parts for older cars compared to newer models (or entirely new entrants into the market). Thieves know better than to steal $60,000 Mercedes Benz because they’ll have it rough trying to sell the spare parts.
A Honda Civic, however? They won’t think twice, so purchase comprehensive insurance for theft amigo, or cry foul when you find your car missing.
Myth 6: Comprehensive Insurance Covers Everything
Confusing terms (read, insurance jargon) is one of the reasons why we have many car insurance myths. Many people believe that comprehensive insurance covers all incidents involving your vehicle. Heck, I used to believe so myself, so yeah, you aren’t alone.
And we’re wrong. In reality, comprehensive insurance doesn’t cover traffic accidents! Comprehensive insurance applies only when your car is damaged by other causes such as vandalism, natural disasters, falling objects and collisions with animals.
In addition, comprehensive insurance pays for the market value of your car in case it is stolen. See why you need comprehensive insurance for theft even for your old 2000 Honda Civic? You need liability coverage for traffic accidents, and comprehensive damage for theft and the other incidents we just mentioned.
Myth 7: You Only Need the Minimum Insurance Required by Your State
When shopping for auto insurance, you need to consider the minimum insurance requirement in your state. Nearly all U.S. states require you to carry liability insurance up to specific limits.
But does your state’s minimum requirement represent adequate insurance to cover all instances? You bet it’s not. Usually, you should only use your state’s minimum requirements as a benchmark or starting point.
Say your state minimum damage liability has a limit of $30,000, and you cause an accident that results in damages worth $60,000. You’d be on the hook for a whopping $30,000!
Besides, going with state-required minimums means your car isn’t protected because no states require drivers to carry comprehensive and collision coverage.
What other car insurance myths do you know? Please share in the comments.