UPDATED: May 27, 2020
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Although their purpose is to insure your safety, sanity, and financial security when things go wrong on the road, do you ever have the feeling your car insurance company is working against you, not for you?
Unfortunately, many of us feel that way because of the seemingly endless reasons insurance companies increase costs and blindside us with hidden fees.
What’s not a myth is that most states require basic coverage. Start here to get a quote!
Top Car Insurance Myths
We want to address the top insurance rumors so that you know exactly what to expect from your provider. Read on to discover the most common and (mostly) false myths about car insurance.
#1 – Red Car = Red Flag
What color cars are more expensive to insure? If you’ve been saving up for that candy apple red car that calls your name each time you pass the lot, have no fear because red vehicles are not more expensive to insure. In fact, car insurance companies claim to be “color blind” when looking at the cars they insure.
What providers do factor into your price are the vehicle’s speed and safety features. A fast sports car may be more expensive to insure. It may also be red, but the color itself isn’t what causes the rate to increase.
#2 – Smoking = Instant Increase
Most of the major car insurance companies have reported that they do not ask if you smoke when determining your insurance rates.
However, some auto insurance companies charge smokers about five percent more.
They charge more because research reveals that smokers have the tendency to be distracted and are more likely to take risks while driving.
Articles urging car insurance companies to charge smokers more have even been published in the New England Journal of Medicine. Tobacco manufacturers, on the other hand, argue that charging smokers more for car insurance is “discrimination and should be illegal.”
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#3 – Insurance World = Wild Wild West
It is a common assumption in our country that auto insurance providers make up their own rules as they go, based on their profit potential.
Many feel that auto insurance agents make judgments and subjectively decide what to charge each of their customers.
The truth is, car insurance companies have strict laws that govern them. Each state has minimum liability coverage amounts, specific insurance requirements, and even rules on what discounts providers are allowed to offer.
#4 – Insurance Increases = No Mercy
You’re in a hurry to get somewhere, but instead of saving time, you cost yourself a whole lot of time and money. Ever seen those dreaded flashing lights in your rear-view mirror and felt that pit in your stomach? As the officer walks to your window, you’re probably wondering what the price will be for your mistake.
Most people think that one ticket is all it takes to add points to their driving record and bump up their rates, but fortunately, that isn’t usually the case.
If you have maintained a clean driving history, you likely won’t see a price increase in your insurance costs for a minor ticket.
#5 – State Minimum = Enough
There’s a common myth that the state’s minimum requirements are all that’s needed for car insurance, but in the unfortunate event of an accident, that minimum coverage is usually far from enough.
If you’re found to be at fault in an accident, you are responsible for all the damages incurred. That minimum coverage will run out fast, and you’ll be left paying out of pocket for medical costs, vehicle repairs, and more. These are huge expenses that add up fast, and when your money runs dry, your assets are at risk.
#6 – Borrowed Car = Driver’s Insurance
It is important to be a good friend, but be careful when lending your vehicle. The popular myth is that if you aren’t driving, you aren’t responsible for damages.
But the truth is, you pay even if you aren’t in the car at the time of the accident.
When your car hits the road, so does the insurance you’ve faithfully paid for even if you’re not in it.
#7 – Cheap Car = Cheap Insurance
A cheaper vehicle often doesn’t have all the safety upgrades, such as adaptive headlights, forward-collision warning, blind-spot warning, lane-departure warning, parking assist, automatic emergency braking, electronic stability control, active restraints, and much more. Insurance companies place a lot of value on those safety features.
It is pretty straight forward: safer cars cost more up front and less in the event of an accident. Your cheap car may not be likely to get stolen, but it won’t have key features required for a more affordable policy.
#8 – 25th Birthday = Price Decrease
Many young people think that once they hit 25, they get the gift of cheaper car insurance. But, turning 25 does not mean an automatic price deduction.
This myth probably exists because teens and young adults are the highest risk class for accidents.
Although age is definitely considered, there are even greater factors, such as your driving history, the vehicle you drive, where you live, how often you drive, and more.
#9 – Comprehensive Coverage = Complete Coverage
Another common myth is that comprehensive coverage has you fully covered on the roads. This idea couldn’t be further from the truth since comprehensive coverage will not cover any damage caused by a collision.
“Comprehensive” is a misleading name because this type of insurance is far from complete yet still necessary. Comprehensive coverage will cover you in the event of theft, vandalism, fire, natural disasters, or hitting an animal with your car.
#10 – Rental Reimbursement = Free Rentals
Many people are under the assumption that the rental insurance they pay monthly gets them a free vehicle rental on their vacation. “Rental reimbursement” does sound like it would cover a vacation rental, but it only covers a rental while your car is in the shop due to an accident.
Rental reimbursement is helpful to have because, after a collision, vehicles are in the repair shop for as long as an average of two weeks. Even after a traumatic accident, life goes on and so do your daily responsibilities. You’ll want that free loaner car.
#11 – Car Insurance = Rental Insurance
It is a common belief that your car insurance will cover you in a rental; however, this isn’t always the case. Your coverage while driving a rental depends on the type and amount of insurance you have.
The salesman at the rental lot would love for you buy his company’s private insurance, but you might not need it. Bottom line: Get the facts before you get the rental.
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As you can see, there are several myths and misconceptions regarding car insurance floating around. Although it may be overwhelming at first, learning more about your car insurance options will pay off in the end.
With a little research, shopping around, and asking the right questions, you will not only find yourself financially protected but also saving a substantial amount of money each month.
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