When shopping for auto insurance, it's important to know how premiums are calculated and what factors drive them. The problem however is that there are a lot of myths out there about car insurance that make it hard to sort fact from fiction. Such myths can result in poor decisions, and potentially leave drivers underinsured or overpaying for their policies. Read on to discover ten myths about automobile insurance every car owner should avoid.
A common misconception is that having a luxury or expensive car means that your insurance will also automatically cost more. The car's value is one of the factors used in calculating costs, but insurers also look at safety ratings, the risk of theft, repair costs, and the driver's history.
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For example, certain luxury cars with high safety features may have a lower premium than mid-range cars without high safety features.
Many drivers believe their auto insurance will pay for the loss or damage of personal items, including smartphones, laptops, or other valuable items in the car. Auto insurance covers the vehicle, but usually not the contents inside. Insurance for homeowners or renters protects personal property. It's essential to review the details of your policy and add coverage if necessary.
Many Americans who own a car that they no longer owe money on don't think they need car insurance. Older cars may not require comprehensive or collision coverage, but in most jurisdictions, liability insurance is still required by law. Driving without coverage at all puts drivers financially vulnerable in the event they cause an accident or damage someone else's property.
Another common misconception is that insurance does not apply when the policyholder is at fault for an accident. In the real world, insurance coverage might still be a factor, regardless of fault. Other types of coverage, like collision coverage, can help pay to repair your vehicle whether or not you're at fault, and uninsured motorist coverage can protect you if the driver at fault doesn't have enough insurance.
There is a common misconception that comprehensive insurance will always be the same for every person. To help you understand what your insurance might cover in the event of an incident, remember that homeowners insurance does cover a multitude of catastrophes such as theft, natural disasters, and vandalism, just not everything. Common exclusions might include damage or loss due to normal wear and tear, mechanical malfunctions, or accidents that were the result of the policyholder acting recklessly. Knowing what your comprehensive policy does not cover is key.
Some small owners maintain that they require a separate insurance policy for the chauffeurs or other drivers who regularly drive their cars. In most cases, it's enough to add the chauffeur as an authorized driver to your existing policy. But you need to let your insurer know every regular driver if you want your coverage to be appropriate. You may find yours denied if you fail to disclose this information.
This myth keeps the misperception alive that, after an accident, drivers have to pay for the repairs out of pocket and then get reimbursed by the insurer. Most insurance companies settle claims directly with repair shops. In general, a policyholder will only need to pay the deductible, the insurer will cover the balance of the expenses.
Drivers assume they are married to an insurer once they get a policy. But you may leave your provider at any time when you discover something better or are dissatisfied with your current coverage. Most insurers will prorate and refund any unused premium. Make sure to shop around for quotes, and check for any cancellation fees if you decide to switch.
People also often mistakenly believe that the car owner's insurance policy provides automatic coverage for anyone who drives the vehicle. Some policies provide coverage specifically for temporary drivers, but not always. If someone else is at fault in an accident while driving your car, your policy might be primary, but the other person's insurance may be involved, too. Read the terms of your policy for information on when coverage extends to other drivers.
A common myth is that vehicles with bright colors, like red or yellow, are more expensive to insure because they are assumed to be driven more aggressively. In reality, insurers do not factor in the color of a vehicle when estimating premiums. Other factors, such as make, model, age, safety features, and the driver's record, matter more in figuring costs of insurance.
However, these misconceptions can lead to costly mistakes. So can assume that because older cars don't need coverage, they aren't still required to have insurance or that comprehensive coverage will cover any scenario. Likewise, misinterpreting how insurance extends to other drivers or personal property could lead to denied claims.
To know how to make good decisions, you must read your policy carefully and request clarification from your insurer if needed. You can also seek the best coverage for your needs by comparing quotes from several providers and reviewing state insurance requirements.
When you avoid these myths and proactively engage with your auto insurance, you can save headaches, heartache, and hard-earned money while keeping yourself safe on the road. Keep in mind that you can significantly improve your experience in the sometimes puzzling world of auto insurance with knowledge on your side.
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