Auto insurance can be a confusing topic. There are so many factors to consider when you’re searching for a policy. Questions like, “How much coverage do I need?,” “How are rates determined?,” and “How do deductibles work?” can keep you running in circles. In addition to questions and other concerns, auto insurance requirements can vary by state and limits can change regularly. Know key information about Auto insurance myths and truth.
To bewilder you even further, there is a lot of misinformation you should be aware of circulating around the insurance industry.
Finding the right coverage for your lifestyle as well as your budget is as easy as contacting a knowledgeable agent who can explain auto insurance and answer your questions. Here at YourPolicy, licensed agents can guide you through the process and find the right coverage for your lifestyle, all while saving you time and money.
In the meantime, here are nine insurance myths that you should be aware of when searching for an auto insurance policy.
Common Insurance Myths and the Truth Behind Them
Myth – Buying Insurance at Specific Times of Year Can Save You Money
There is not a “best” month or season to purchase car insurance. If you don’t currently have car insurance, the best time to purchase coverage is now. Insurance history is one of the most significant contributors to what you’ll pay for insurance, so buy a policy as soon as you’re ready to get on the road. Your insurance premium is completely unaffected by when you choose to buy.
Myth – The Minimum Amount of Auto Liability Insurance Required by Law is Sufficient
Nearly every state requires a minimum amount of auto liability coverage. However, purchasing only minimum coverage means that you could possibly be subject to high out-of-pocket expenses in the case of an accident. The insurance industry and consumer groups typically recommend a minimum of $100,000 bodily injury protection per person and $300,000 per accident. If the value of your assets exceeds your auto liability insurance limits, you may want to add an umbrella policy to protect these assets.
Myth – Your Credit Score Does Not Impact Your Premium
A credit-based insurance score (different from an actual credit score) is only one of a group of rating factors used when determining the cost of your auto insurance. While a good credit score has been shown to be a good predictor of whether you’re likely to file an insurance claim, your insurance history and driving record are more important to your insurer.
Myth – A Short Lapse in Car Insurance Will Not Affect Your Rates
A lapse of even a couple of days can negatively impact your auto insurance rates. Whether your policy has been canceled recently due to missed payments or you simply let coverage lapse, you risk being financially responsible for anything that happens to your vehicle. In most states, active car insurance is a requirement before you get behind the wheel.
Myth – The Color of Your Car Determines the Cost of Your Auto Insurance
The price of your auto insurance policy is based on many factors and color is not one of them. Car make, model, body type, engine size, and vehicle age, as well as the sticker price, cost to repair it and the likelihood of theft are the important elements that affect your auto insurance premiums. Other considerations are the age, driving record, and credit history of the driver. Don’t worry. You can stop losing sleep because your car is “arrest me red” or “blend into the sky” blue.
Myth – Auto Insurance Costs More as You Get Older
This is, in fact, not true. Older drivers may be eligible for special discounts. Those over 55 years of age can get a reduction in their auto insurance premium if they successfully complete an accident prevention course. Check state and local agencies as well as AAA and AARP for information on these courses. In any case, check with your insurance professional to get details on how these programs and discounts vary by state and insurance carrier.
Myth – Personal Auto Insurance Also Covers Business Use
If you’re self-employed and use your vehicle for business purposes, personal auto insurance may not protect you. It’s important to talk to your agent about whether or not you need business vehicle insurance. If you have employees using your vehicle regularly, check their driving records.
Myth – Car Insurance Follows the Driver
If you lend your car to a friend or family member, keep in mind that you are also lending them your car insurance. Your policy typically covers anyone whom you allow to drive your vehicle. If a person has an accident while driving your car, you could be held personally liable for negligence. For example, if it’s determined that you shouldn’t have entrusted this individual with your car due to any type of impairment you will be responsible for damages.
Myth – New Cars are More Expensive to Insure
This is not necessarily true. There are a number of factors involved. If you’re driving a brand new minivan or sedan that is replete with safety features, you could pay less than a person driving an older sports car. However, newer cars have more technology that can be more expensive to repair or replace, increasing insurance costs. On the other hand, as models become obsolete, parts can be difficult to locate. This can increase the cost of insurance on an older vehicle. To get the best information and advice, talk to your insurance agent.
It’s important to understand and be aware of the misinformation surrounding the auto insurance industry Before you make any insurance decision, it’s essential to stay informed. The best way to do this is to talk to an insurance agent who can help you sort through the facts and find an insurance solution that fits your needs and your budget.