Detailed and Debunked: Auto Insurance Myths and Misconceptions

by James on April 29, 2016 · 0 comments

782342When buying or renewing car insurance, it helps to have a good grasp of the factors that affect your coverage and insurance rates. It also helps to be familiar with myths and misconceptions associated with auto insurance so you end up picking the policy that meets your needs. Examples of such myths and misconceptions can be found at Oregon’s Department of Consumer and Business Services and Oklahoma’s local government page. Meanwhile, here are all the myths dispelled and debunked.

Getting Coverage for Minimum Liability Is Sufficient

Liability coverage is required for all states except New Hampshire. You might be tempted to lower your insurance rate by opting for minimum liability coverage. This can get you in the red in the future should you end up being the one at fault in an accident. According to the Insurance Information Institute, it is wise to get liability coverage equivalent to $300,000 per accident and $100,000 per person. This isn’t that much if you have a good driving history and live in a location where insurance rates are relatively low. Increasing bodily injury coverage to $300,000 may mean as little as adding $25 to your monthly premium.

Red Cars Have High Auto Insurance Premiums

The color of your car has no impact whatsoever on your car insurance premium. What definitely affect insurance rates are your car model’s safety record, your driving history, and the cost of vehicular repairs. So, when shopping for a car, just go ahead and pick whatever vehicle color you like from the ones available in places like Motor City Auto Sales.

Someone Else Driving Your Car Gets Covered by Your Insurance

This is not always true. In most states, the primary car insurance is the policy that covers the vehicle. But you should still pay attention to the terms of your policy because laws differ from state to state.

You Won’t Need Personal Coverage If You Use a Company Car

In the event of an accident and you are the one behind the wheel of your company car, you can still get personally sued. It is likely that liability coverage is not included in the business car insurance policy. Consider buying separate personal protection when renting or borrowing a car.

Possessions in Your Car Are Covered

Your belongings inside the car are not automatically covered by your auto insurance policy. The coverage only extends to the vehicle itself and its built-in attachments. Anything inside your trunk, for example, is not covered in case the car gets stolen or is damaged during an accident. Gadgets and important personal effects may be covered by your renters or homeowners insurance, so you might want to check the terms of those policies.

Credit Score Does Not Matter

There is such a thing as an insurance score, which gauges your overall trustworthiness in managing your financial affairs. This insurance score, which is based on your credit score, influences your auto insurance rate each time you renew, change, or buy vehicle insurance coverage.

The Older You Are, The More Expensive It Is to Insure Your Car

This typical auto insurance misconception works quite the opposite way. If you are 55 years old or older, you can get a ten-percent discount in your car insurance rate. This discount is normally applicable for three years provident you have successfully fulfilled a course in accident prevention.

AARP, AAA, and other state agencies offer these defensive driving courses. It is also wise to talk to your insurance carrier to find out which accident prevention courses they approve. For retired individuals, a discount of up to five percent may apply.

Personal Car Insurance Can Protect You When Using Your Car for Business

If you are self-employed and you travel to make a living, you might want to look closely at the coverage afforded by your personal auto insurance policy. It is true that business car insurance policies are far more costly than personal ones, but they have better coverage in case you get involved in an accident.

Damage from Natural Causes Is Covered

If your vehicle is damaged by hail, fire, flood, or crashing tree branches or it either gets vandalized or stolen, you are not automatically protected. Comprehensive and collision coverage, which compensate for damage caused by the aforementioned factors, are usually optional. Thus, it helps to pay attention to your auto insurance policy and note which coverage you have decided to forgo.

All in all, you might want to keep these debunked myths in mind when buying, changing, or renewing your auto insurance policy. They can help you save money and time.

Kieran Daly is an office manager for an insurance company. He likes to share his insurance insights on the internet. You can find his posts on many insurance and financial blogs.

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