Car insurance can be a confusing thing to understand, particularly if you’re new to driving. The fact that the internet is filled with car insurance myths and misconceptions only adds to the confusion, so we’ve compiled 10 of the most common ones here to help you make sense of it all.
You don’t have to believe every myth that you read or hear, start by learning the truth about these 10 misunderstood things about car insurance before moving on to others.
Myth 1: Red cars cost more to insure
If you’ve been told that red cars cost more to insure, it’s time to start setting the record straight. The color of your car has nothing to do with the cost of your insurance, and here’s why:
- There are no specific laws regulating car insurance rates based on car color.
- Insurers have one central database that they use for all quotes and rates, so there is no way for them to know what color your car is.
Myth 2: Your credit score doesn’t affect your premium
Believe it or not, a lower credit score can increase your car insurance premium. The main reason being is that people with a lower credit score are more likely to be involved in a car accident than those with higher scores.
Myth 3: Male drivers under 25 are automatically charged higher rates
It’s true that the average cost of insurance for a male driver under 25 is higher than the average cost of insurance for a female driver under 25. However, this isn’t always the case. The best way to determine rates is by shopping around and comparing prices from different providers.
Myth 4: Tickets and accidents stay on your record forever
This myth is not true. A few minor infractions on your record will not ruin your car insurance rates. If you have a clean driving record for more than 3 years, the insurance company will remove the ticket from your record, meaning it will no longer affect your car insurance rates.
In conclusion, there are many things that people misunderstand about car insurance, and we have debunked 10 of those myths in this blog post.
Myth 5: Only your state minimum coverage is required by law
Many states require that you carry liability insurance in case you are at fault for an accident. But just because your state doesn’t mandate it, doesn’t mean it’s not a good idea. Minimum coverage may not be enough if another driver is injured and decides to sue you. If this happens, the other person could take all of your assets, including your house or car.
Myth 6: Full coverage means your car is fully protected
It’s easy to assume that if you purchase a full coverage policy for your vehicle, then you are fully protected. However, this is not the case. Full coverage does not mean that your car will be repaired for any amount. If you choose a plan that has a $500 deductible, then it will only cover repair costs up to $500.
Myth 7: You don’t need rental car coverage if you have a good credit card
If you do not have a good credit card, then you are paying out of pocket for the rental car. If you have a good credit card, then the rental car company will charge your credit card and it is like they are paying for the rental car. Even if they only charge your card $1,000 and then give you a refund in 30 days, that is still $1,000 worth of cash out of your pocket when it could have been covered by insurance.
Myth 8: Your insurance goes up after you file a claim
For the majority of insurance companies, filing a claim will not affect your rates. The only way you will see an increase in your car insurance rates is if you have filed more than two claims in the past five years.
Myth 9: Older cars don’t need as much coverage
You may have heard that old cars don’t need as much coverage because they are cheaper to fix. But just because your car is old doesn’t mean it’s not worth anything. A ten-year-old car can be worth upwards of $5,000 depending on the model. Plus, if you keep up with maintenance and service your vehicle, an older car could last you another 10 years or more.
Myth 10: All insurance companies are the same
Not true. This is one of the most misunderstood things about car insurance because there are so many different types of policies available on the market, each with their own pros and cons. The best way to find a policy that suits your needs is to get quotes from at least three providers before committing. A simple online quote will give you an idea of how much you could save with a switch.
You would be surprised by the difference in rates and coverage. Plus, some companies offer discounts if you sign up with them and then maintain good driving records.
