In the world of auto insurance, there can be a lot of misconceptions about how rates are calculated, creating widespread auto insurance myths which can prove hard to dispel once they have become so well known.
Here’s a list of the top 10 auto insurance myths.
A car’s color can lead to higher rates
The Insurance Information Institute says despite the public perception that red cars cost more to insure, it’s not true. As they relate to a specific vehicle, auto insurance rates are based on the make, model, engine size, the car’s safety record and the likelihood it could be stolen, not the paint job.
Older people get charged more for auto insurance
There’s no connection between age and getting an online car insurance quote. In fact, the III says safe older drivers may actually qualify for discounted rates after taking an accident prevention course.
Credit history doesn’t affect auto insurance rates
Insurance companies can and will take drivers’ credit histories into account when determining car insurance quotes, as someone with a low score might appear more likely to stop making their insurance payments. However, the III says most people end up with lower rates once credit scores are factored in.
Drivers only need minimum coverage
Nearly every state has a required minimum levels of insurance coverage, but the III says it may be a mistake to maintain just those levels. Having less coverage could make drivers more vulnerable if another driver decides to sue following an accident.
Drivers are always covered for falling limbs and theft
Not all insurance policies cover situations such as fire, theft, vandalism or tree damage. These incidents fall under comprehensive or collision coverage, which are optional.
One ticket will increase rates
While getting a speeding ticket may increase a driver’s auto insurance rates, it’s not a given, says Progressive. The company says while the ticket will affect that person’s driving record, it may not have an immediate impact on their rates.
A friend’s insurance will cover an accident in your car
Another of the most common auto insurance liability myths is that if one person lends a car to a friend, the friend’s insurance will pay for any potential damages. The III says that’s not the case in most states. Generally, the policy involved is the one for the vehicle, not the driver.
Auto insurance companies can charge whatever they want
Each state requires insurance companies to tell them how rates are calculated, and states can review – and in some cases reject – any rate increases insurers propose.
Soldiers pay more
The III says soldiers generally qualify for an auto insurance discount, regardless of what branch they serve in. However, to get the discount, they may need to have a commanding officer contact the company to confirm their status.
Policies cover both personal and business use
For people who use their car for business and personal use, the III says personal polices may not offer full protection, so getting a business auto insurance policy is recommended.