Car insurance can be confusing, and car insurance myths only make it harder to understand. Many drivers believe things like car color affects insurance rates, minimum coverage is enough, or a brief lapse in coverage won’t impact premiums. These misconceptions can lead to higher costs, denied claims, or inadequate protection when you need it most.
Let’s clear up the confusion by debunking nine common car insurance myths so you can make smarter decisions and avoid costly mistakes.
Understanding Car Insurance Myths: Facts vs. Fiction
Myth #1: Buying Insurance at Certain Times Saves Money
Truth: There’s no special time of year when car insurance is cheaper. Unlike holiday sales, insurance rates are based on risk factors, not the season.
What actually affects your premium?
- Your driving history
- Your vehicle’s make, model, and safety features
- Your credit-based insurance score (in most states)
- Where you live and local accident rates
The best way to save money is to compare quotes regularly and ask about available discounts.
Myth #2: Minimum Liability Coverage Is Enough
Truth: State minimum liability coverage is often too low to cover the actual costs of a serious accident.
For example, if your state’s minimum coverage is $25,000 per person for bodily injury, but medical bills total $75,000, you’d be responsible for the remaining $50,000 out of pocket.
The Insurance Information Institute recommends:
- $100,000 in bodily injury coverage per person
- $300,000 per accident
- $100,000 in property damage coverage
Carrying more coverage helps protect you from financial loss in a major accident.
Myth #3: Your Credit Score Doesn’t Impact Car Insurance Rates
Truth: In most states, insurance companies consider credit-based insurance scores when setting rates.
According to the Federal Trade Commission, drivers with poor credit-based insurance scores pay 20 to 50 percent more than those with excellent credit.
How to improve your credit score and lower insurance rates:
- Pay bills on time
- Reduce outstanding debt
- Check your credit report for errors
Not all states allow credit-based pricing, so check local regulations.
Myth #4: A Short Lapse in Coverage Won’t Affect Your Rate
Truth: Even a brief lapse in coverage can lead to higher premiums.
Insurance companies see gaps in coverage as a risk factor, which can result in:
- Higher rates when you reinstate coverage
- Possible license suspension, depending on your state
- Denial of coverage from some insurers
Always renew your policy before it expires. If switching providers, ensure there is no gap between policies.
Myth #5: The Color of Your Car Affects Your Car Insurance Rate
Truth: The color of your car has no impact on insurance costs.
What actually matters?
- Make, model, and year of the vehicle
- Engine size and body type
- Repair costs and safety features
- How often the car is stolen
For example, a red Honda Civic costs the same to insure as a blue Honda Civic, assuming all other factors are the same. However, a sports car will likely have higher premiums due to increased risk.
Myth #6: Older Drivers Always Pay More for Car Insurance
Truth: Many older drivers qualify for discounts, especially those over 55 who take defensive driving courses through AARP, AAA, or state programs.
However, once drivers reach age 75, some insurers may raise rates due to:
- Slower reaction times
- Increased accident risk
- Higher medical costs after an accident
If you’re a senior, shop around for insurers that offer mature driver discounts and consider taking a defensive driving course to keep costs down.
Myth #7: Personal Auto Insurance Covers Business Use
Truth: If you use your car for business purposes, your personal policy won’t cover you.
This applies to:
- Rideshare driving (Uber, Lyft)
- Delivering food or packages (DoorDash, Instacart)
- Transporting business equipment
If you’re in an accident while using your car for work, your claim may be denied, leaving you responsible for all costs.
Myth #8: Car Insurance Follows the Driver, Not the Car
Truth: Car insurance follows the vehicle, not the driver.
If you let someone borrow your car and they cause an accident:
- Your policy is the primary coverage
- If damages exceed your policy limits, their insurance may help
If the driver was unlicensed or impaired, you could be personally liable for damages, fines, and legal consequences.
Myth #9: New Cars Cost More to Insure
Truth: New cars don’t always cost more to insure. Many modern vehicles come with safety features that reduce risk, such as:
- Automatic emergency braking
- Lane departure warnings
- Anti-theft systems
These features can lower your insurance rates. However, luxury cars and sports cars often have higher premiums due to expensive repairs and replacement costs.
Conclusion
Understanding car insurance myths can help you make better financial decisions and avoid costly mistakes.
Key takeaways:
- State minimum coverage may not be enough to protect you in a major accident.
- Even a short lapse in coverage can increase your insurance rates.
- Credit-based insurance scores impact premiums in most states.
- New cars may be cheaper to insure if they have advanced safety features.
Before making any coverage decisions, consult with a licensed insurance professional. According to insurance expert Jason Reynolds, it’s essential to have expert guidance to ensure you choose the right policy. YourPolicy, a trusted provider of auto insurance, helps drivers secure the best coverage at competitive rates.
Their licensed agents are committed to answering your questions and simplifying the process. For a free, no-obligation quote, contact YourPolicy today at (866) 236-0203 or email sales@your-policy.com.
Frequently Asked Questions About Car Insurance Myths
1. Does the color of my car affect my insurance rate?
No, car color does not impact your insurance premium. Insurance companies base rates on factors like your car’s make, model, engine size, repair costs, and safety features. A red car and a blue car of the same model will have the same insurance cost.
2. Is the minimum state-required car insurance enough?
No, minimum liability coverage is often not enough to fully protect you in an accident. If medical bills or damages exceed your policy limits, you will have to pay the remaining costs out of pocket. Experts recommend at least $100,000 in bodily injury per person, $300,000 per accident, and $100,000 in property damage coverage.
3. Can a lapse in car insurance increase my rates?
Yes, even a short lapse in coverage can raise your premium. Insurance companies consider gaps in coverage a risk factor, which can lead to higher rates. Always renew your policy before it expires or ensure there is no gap when switching providers.
4. Does my personal auto insurance cover business use?
No, personal auto insurance does not cover business use. If you drive for a rideshare service, deliver food, or use your car for business purposes, you may need commercial auto insurance. Without it, your claim could be denied if an accident happens while working.
5. Does my credit score affect my car insurance rate?
Yes, in most states, insurance companies use credit-based insurance scores to determine premiums. Drivers with lower credit scores often pay 20% to 50% more than those with excellent credit. Maintaining good credit can help lower your car insurance costs.
6. Does car insurance follow the driver or the car?
Car insurance follows the vehicle, not the driver. If you lend your car to someone and they get into an accident, your insurance policy will cover the damages first, even if you weren’t driving. If damages exceed your coverage, the driver’s insurance may be used as secondary coverage.
