6 Common Car Insurance Myths

Six Common Car Insurance Myths

The ins and outs of buying auto insurance can be complicated, confusing and frustrating, so small wonder there are a lot of false assumptions about coverage and many common car insurance myths.

1. The more you pay for a car, the higher the cost your auto insurance.

Not exactly. Car insurance companies look at repairs and replacement costs on a car, but not the sales price. If the company has a high “loss history” with a particular model, that is factored in when determining how much they’ll charge you for collision and comprehensive coverage. If a mid-priced car has a high loss history and costs more to repair than an expensive vehicle, premiums might be higher than you’d pay for the pricier car.

2. Red cars are more expensive to insure.

This myth assumes that people who drive a racy red car drive more aggressively, which is not necessarily the case. The color doesn’t influence the cost of auto insurance. Instead, insurance companies look at the year, make, model, engine size of a car. They consider how expensive repair costs are, how often the make and model are stolen, and other factors related to the driver, such as driving record and credit history.

3. As an older driver, you pay more for car insurance.

A driver 55 or older usually enjoys reduced rates if an accident prevention course is completed successfully. You may also be able to qualify for a discount if you drive less, perhaps due to retirement or working from home. Ask your insurance providers about discounts you may qualify for.

4. If you have car insurance, you’re covered in the event of car theft, vandalism, or natural disaster.

Coverage in these cases is only available if you have added comprehensive and collision to your standard policy. Comprehensive and collision coverage are important to add on, particularly if your car is worth more than $1,000 or ten times the premium. Always consider all your coverage options to make sure you’re fully protected.

5. If another person drives your car and gets into an accident, his or her insurance will cover any damage.

Most states require your auto insurance company, as primary insurance provider, to pay damages caused by the accident, whether you were at the wheel or not. If you’re concerned about a person’s driving abilities, don’t let them drive your car.

6. The minimum amount of auto liability insurance required by law is all you need.

Almost every state requires car owners to carry a minimum amount of auto liability insurance. That doesn’t mean that the minimum will be enough. You’re still likely to pay out-of-pocket for losses resulting from an accident, and these costs can be substantial. Balance your coverage amounts with how much you can afford to pay in premiums and your ability to pay thousands of dollars in out-of-pocket costs.

These are just a few of the mistaken assumptions people may have about auto insurance. Learn more about how auto insurance works here. You can also compare coverage costs from a variety of insurance companies using our quote generator.