Car insurance is a topic that seems to be riddled with myths and misunderstandings, which only works to make it somewhat of a recipe for confusion and possible financial faux pas. Being aware of the reality behind car insurances can help you make well-informed decisions and avoid getting sidetracked by the following car insurance myths. Some of the most prominent car insurance myths include:
1. Black cars are more expensive to insure.
A red car is going to charge higher premiums a myth. The theory goes on to say that bright flashy colors like red easily attract accidents or policemen for speeding tickets, which is why insurance companies charge more. Okay, this is what is true: the color of your car will never be a part of the calculation of premiums when deriving insurance rates. They, instead, factor in elements such as the car’s make, the model, age, size of its engine as well as the safety features in getting the possible premium to be paid. Some driver-specific details also play a significant role in determining this premium cost, which includes driving history, age of the driver, and the area of residence.
Myth 2: Your credit rating doesn’t affect your insurance rate.
Many people are unaware that their credit rating impacts the car insurance premium. In fact, most states do allow an insurer to consider a credit-based insurance score, which is used as part of the much bigger process of determining risk. Good credit scores statistically claim less frequently and are therefore less risky for insurers. Therefore, a driver with good credit is likely to enjoy lower charges, while a poor credit holder will most likely experience more costly rates. But keep in mind that doing insurance rate-making with credit scores is a procedure regulated by state, and therefore, the weight of this factor might differ from one place to another.
Myth 3: Older drivers invariably have to pay more for car insurance.
Though the argument is correct in that the very young and very old driver pays the penalty for a perceived higher risk to insure, it is a sweeping generalization when taking everything into account. Many drivers in their 50s and early 60s often benefit from much lower premiums, as exceptions, because they usually much experience and not a bad driving history. However, by the time they turn 60 and above, premiums would tend to increase, as they have slower reflexes and are more prone to medical conditions. Still, safe driving can make the best out of premiums at any age.
But this is 4th in the list: Your insurance pays when you rent a car.
Most people will tend to think that when they are renting a car, their personal car insurance tends to cover them. This is however not the case, and coverage is at times promised but not delivered. Before renting a car, it is advisable to check with an insurance agent or study the insurance policy clearly in order to avoid nasty surprises later. If your policy does not include rental cars, you would need to purchase extra insurance protection through the rental shop or even through your credit card if yours is one of those that offers extra insurance protection to members as one of its perks.
Myth 5: To protect you, you only need minimum liability Many drivers believe that, just by buying an insurance package that satisfies the minimum liability requirement by state, they are protected enough. The legal minimum is what it says—minimum coverage required if you have liability insurance on your vehicle. It often falls woefully short in the event of a major accident, though. If you’re the at-fault driver in an accident that causes major property damage or injuries, those costs can easily blow past the limits of your policy, leaving you personally responsible for the difference. Here’s how to know if you have enough coverage.
Myth 6: Your insurance rates automatically decrease as your car gets older.
Many people believe that insurance rates automatically fall as their car grows old. It is true, to an extent, because of the falling value of the car in comprehensive and collision parts of the policy, but other factors of the policy might help offset this decline. For example, if your car is raising costs to repair, or spare parts are scant in the market, the premiums you pay will not tend to be stopped; it might actually surge. Further, there are risk profiles of the driver, the changing accident rates in a local area, and other factors that may determine the trend of premiums in the long run.
Knowing the truth behind a few of these big car insurance myths can help you make more informed choices and assure you are getting the right coverage for your needs. Being knowledgeable can help you avoid any misconceptions that might cause a failure of the right protection or unnecessary costs. Always go through your insurance policy to understand in full the kind of coverage you have taken and what things can impact your rates by discussing them with your insurance provider.