Knowing car insurance myths can help you avoid costly mistakes, especially in areas in which practical evidence and industry reports point to the need of structural and mechanical changes in your automobile. For example, thinking that an old car doesn't attract thieves – which is a myth – could make you incur losses, but knowing that a burglary prevention tool can avert car theft – which is a fact – can save you some cash down the road.
1, My Red Car Will Cost Me Dearly If I Want to Insure It
Forget about the color of a car affecting premium rates. Whether you have a red car – or a blue or yellow one, for that matter – will not increase or decrease your monthly premium remittance. Your insurance company cares more about things like body style, engine size, year, and model than the cosmetics of your automobile. What also matters to your insurer is your behavior at the wheel, tickets you could potentially rake in, and moving violations like reckless driving and speeding.
2, My New Car Will Attract More Thieves than My Old One
This is another myth you have to let go. Car thieves are more drawn to the model and engine strength, among other elements, than the car's age – even though, don't get me wrong, the newer a car, the more likely it would draw more attention than a second-hand vehicle would. To get more information about which vehicle is on car thieves' radar at the moment, and to figure out whether your automobile is in that category, go to the National Insurance Crime Bureau's website. Choose a state and the NICB will tell you which vehicles are "hot" right now, in terms of systematic theft, as well as the respective year. For example, if you select Alabama, you would see that the following cars have a high probability of being misappropriated:
- 1997 Chevrolet Pickup (Full size)
- 2000 Ford Pickup (Full size)
- 1996 Honda Accord
- 1997 Toyota Camry
- 1989 Chevrolet Caprice
- 2004 Chevrolet Impala
- 1998 Ford Explorer
- 1997 Ford Crown Victoria
- 1997 Mercury Grand Marquis
- 1999 Ford Taurus
So, if your car is on the list, just take extra caution and read the NCIB's theft prevention tips. The organization calls those tips "layers of protection," and they include things as basic as common sense and as complex as tracking devices, warning devices, and immobilization devices.
3, I'm Covered If Anything Happens to My Car
Don't believe that. Unless you have comprehensive and collision coverage, you are on your own if your automobile is damaged by flood, hail or fire, or if vandals, say, on a Friday night spray-paint graffiti on your windshield. Reducing risks of damage to an automobile is one of the reasons why a lender or car leasing company would require that you add comprehensive and collision riders to your insurance policy before driving the car.
4, My Credit History and Score Have Nothing to Do with My Insurance Rates
That is inaccurate. Your insurance company is very interested in your financial situation because – needless to say – premiums typically don't pay themselves off. You need a job and sufficient income to afford premium payments, so things like employment history, income level, and net worth are important to your insurer. Additionally, your credit score and overall creditworthiness play an important role in the way the insurer evaluates your risk profile, that is, to ascertain whether you are a high-, medium- or low-risk potential client.
5, I'm Not Responsible if Someone Drives My Car – And Damages It
Not true – and I might even add, nonsensical. The car is yours, so anything that happens to it is your responsibility, irrespective of who was at the wheel when the incident occurred. You can go back and sue the person responsible for the incident, but initially, you would have to bear the responsibility when talking to your insurer. Note that your insurance company follows the car, not the person operating it.
6, Everything in My Car is Covered – Including Personal Belongings
Your insurance company does not cover personal property you leave in your car, so think twice before you leave your latest iPhone or brand-name fur coat in the automobile. If personal items get stolen or damaged in the course of an incident, you are out of luck.
7, My Car Insurance Policy Covers Rentals, Too
Your car insurance policy typically does not cover rentals, especially if you lease the automobile overseas. But talk to your insurer to get more information about coverage transferability because some insurance companies grant that coverage. Usually, the rental agency would recommend that you insure the car for a small daily amount to be added to your rental quote, and I think this is a smart thing to do, especially if you are in foreign land and the road conditions and local driving patterns are dissimilar to what you are familiar with in the U.S. This has nothing to do with your driving ability; it pertains more to the increased risk level and the difference in infrastructure and driving habits that you could experience overseas.
8, It Costs More to Insure Sports Cars
The jury is still out on this one, but suffice it to say that if you are a young driver – say, 24 years or younger – and have a checkered driving history, insurance companies are more likely to consider your application as a high risk. A checkered driving history typically includes multiple moving violations within a short period of time, or over an extended period that shows a troubling frequency pattern – think of getting a speeding ticket or being cited for driving under the influence of a banned substance every third Saturday of the month over a 12-month period, for example.
9, No-Fault Insurance Means I Don't Pay Anything After an Accident
No-fault insurance does not imply that you are not at fault in an accident or that your potential liability is limited. The law varies by state, but in essence, no-fault insurance covers you and the other party for immediate expenses – say, lost wages and medical care.
10, My Car Insurance Policy Can Be Cancelled at Any Time
Contrary to popular belief, your car insurance company cannot cancel your policy without giving you an advance notice, or with no cause. In other words, your insurer cannot arbitrarily annul your policy if you have not breached the terms and conditions of the contract. Cases of contractual breach include non-payments of premium along with filings of fraudulent claims.
With a profound knowledge of car insurance myths, you have a powerful reason to make the right coverage choices, not only with the policy type you choose but also the brand and model of vehicle you buy. The myths range from higher insurance for sports to no-fault insurance responsibilities, coverage for rental automobiles, and the impact of creditworthiness on premium quotes. If you have any question about car insurance, contact your coverage provider.