If you have a car, chances are you have car insurance – coverage is required by law in almost all states. But do you really understand your car insurance policy? Myths and misunderstandings abound but don’t panic. Bankrate is here to help you cut through the confusion. We’re using our combined 47 years of insurance experience to debunk some of the most common car insurance myths – things we’ve heard over and over again while working at different insurance companies – to help you understand how your coverage works.
10. If someone is driving your car, they cover any damages
Taking us out of number 10 is the myth that insurance follows the driver, not the car. Mistakes; and the other way around. Car insurance covers the car, not the driver. If you lend your car to a friend and they cause an accident, your policy will be the primary insurance. Your partner’s policy can be restarted, but only if your limit has been used. Some policies may have a driver’s license, which may mean that no one else can drive your car, so make sure you understand how your policy works before you give permission for someone else to drive your car.
9. Drivers with red cars pay more for insurance
This theory states that drivers of bright red cars are more likely to engage in dangerous driving behavior and pay more for car insurance. Fortunately for anyone who owns a red car, this is a complete myth. The truth is that your car insurance company may not know the make of your car. Color is not a factor that car insurance companies use to evaluate your policy. The only exception would be if you are paying extra for the paint job, but even then, the extra cost is not so much the color of the paint as the paint itself.
8. New cars are very expensive to insure
This is not always true, but it is very difficult because there are different aspects of the age of the car that affect the prices. First, new cars can have advanced safety features that can reduce accidents and reduce the chance of serious injury if one does occur. All of these factors can lower your price. Newer cars are often eligible for the new car discount, which can save you money on your car insurance. However, newer vehicles are likely to be more expensive to repair or replace, which can increase prices compared to the older model. Finally, newer cars often require more comprehensive and collision coverage than older cars, and higher coverage means higher premiums. The age of your car affects your value in a number of ways, but it’s not as simple as “newer cars are more expensive to insure.”
7. A harmless accident will not affect my prices
If the other driver is taking care of everything and you don’t file a claim with your insurance company, or if you and the other driver are driving the issue out of pocket, this should be true. Unfortunately, if you file a claim with your insurance company – even if you are not at fault – there is a risk that your costs could increase. You shouldn’t be penalized or fined because it wasn’t your fault, but if you have unpaid car insurance, you can lose it, which can lead to higher costs.
6. All car insurance companies are the same
Of course not! Although many car insurance companies offer similar services, some things set them apart. Each company has its own method, which means that you will get different prices from different companies even for the same lighting. Different companies also have different approvals. Additional options are available, such as car rental and roadside assistance, but you may want to look for a company that has a special option, such as shared insurance. Discounts are the same – you’ll find standard discounts with most insurance companies, but some carriers offer special discounts. Some companies have local agents, while others do everything electronically. Finally, third-party customer satisfaction ratings and financial strength vary widely, and this can help you have a more rounded view of the carrier.
5. Your salary is what you will pay
A review is just that – a review. Most companies will give you a car insurance quote based on what you offer. If the information is not correct, your statement may change when you are ready to purchase the policy. Auto insurance companies pull two reports – the Comprehensive Loss Underwriting Exchange (CLUE) report and the Motor Vehicle Record (MVR) – before giving you a final quote and allowing you to purchase coverage. These reports show your history of insurance products and car activities. If you did not include the information you entered, or if the information you entered was incorrect, you will see an increase in your final price.
4. You only need to spread a little
Even if you only need your state’s minimum transportation to drive legally, you may still need to cover more depending on the situation. If you have a loan or a mortgage on your car, you will need to buy everything. Even if you own your car enough and can drive legally with a lower state limit, buying a higher limit is often a good idea. The price difference is usually not that big and you get more protection.
3. Comprehensive learning covers everything
“Comprehensive coverage” is an industry term that means your policy includes comprehensive and collision coverage, which covers damage to your vehicle from a variety of perils. But having a comprehensive coverage policy doesn’t mean you’re covered for every situation. Willful damage, for example, is not covered. Your policy may also have exclusions about who can drive your vehicle, what type of vehicle is used and what countries your vehicle is owned. After reviewing your payment plan with your insurance provider, discuss how you can support your policy. Everyone’s interpretation of everything is a little different, and you want to make sure you get what you expect.
2. You don’t need medical expenses if you have health insurance
If you are trying to save on your car insurance, you may be thinking about skipping medical care, especially if you have health insurance. This is not a good way. Medical insurance covers you and your passengers in the event of an accident, regardless of the cause. In some countries, private health insurance (PIP) is available (and often required) instead of health care. Even if you live in an area where these types of coverage are optional and you have health insurance, you should consider purchasing an existing plan. Limitations on your health insurance can leave you with out-of-pocket expenses. Your medical bills can also help you repay your health insurance. And in states where PIP is available, you can get more than just medical bills, such as help with child care expenses, household responsibilities or income loss.
1. You can discuss your needs
Turn on the microphone so we can say out loud: False! Negotiating the price you pay for car insurance is impossible. Auto insurance companies use proprietary algorithms to determine how much risk you present, and your risk reflects your risk. If you get a lower price from another company, the company’s algorithm sees you as a lower risk. You can’t take a low quote from other carriers and expect them to match it; Those carriers cannot change their algorithms to get or keep your business. You can control your cost by choosing the right coverage and using discounts, however, there are ways to lower your cost.
A very important point
Car insurance can be complicated, which has led to a lot of confusion. Knowing the truth about car insurance is essential to making informed decisions about your Study. Plus, since you know the truth about the most common auto insurance myths, you can help steer clear whenever the topic comes up.