When it comes to auto insurance, deciphering coverage provisions, exclusions, and premium calculations is already hard enough. However, to complicate matters there are a number of myths floating around that can make it near impossible to understand your policy.
In fact, in a recent survey by insure.com, 52 percent of respondents had a misunderstanding of their auto insurance coverage. There were some questions where over 65% of the participants answered incorrectly!
Below we are going to point out the most common myths associated with auto insurance and provide the correct information in regards to each one.
Please remember that if you ever have a specific question in regards to your auto insurance policy, please feel free to reach out to our office.
One speeding ticket will make my car insurance rates go up.
Sometimes this is true, but in many cases, you have to get two tickets before your rate goes up. Your driving history, the length of time you’ve been insured with a company and how fast you were going when you were cited can affect whether your rate increases or not. Keep in mind that a speeding ticket may not be the sole reason your rate increases, as several factors are considered when reviewing them.
If someone driving my car causes an accident, I won’t be held responsible.
It’s possible you’ll be financially responsible for an accident — even if someone else is driving your car. In most states, the car insurance policy covering the vehicle is considered the primary insurance, which means that the insurance company for the vehicle must pay for damages caused by an accident. Even so, it’s still possible that the driver’s insurance company could be responsible for some of the damages. Why? If the vehicle’s insurance limits are too low and don’t cover all the damages, the driver’s insurance may be next in line to pay for the remainder of the damages.
Car insurance rates go down dramatically when drivers turn 25.
Younger and older drivers typically have the most car crashes, and customers of different car insurance companies have different claims experiences. When determining auto insurance rates, insurers generally consider a variety of information about you, including age, vehicle information, claims history and the claims experience of other customers like you.
While it’s generally true that rates will go down when you turn 25 if all information about you and your vehicle remains the same, changes in one or more of the other pieces of information used to calculate a rate could lead to you getting a higher, lower or the same rate when you turn 25.
Auto insurance rates aren’t regulated, so auto insurance companies can charge what they want.
Each state requires auto insurance companies to file how they calculate customer rates, and insurers cannot deviate from these filed rates. Each state also has regulators who review that information and the rates companies charge.
I only need the bare minimum amount of car insurance.
Many states have minimum car insurance requirements, but the minimum amount of required insurance may not cover all of your costs. If you cause an accident that results in a lawsuit and your insurance limits don’t cover all of the damages, your assets could be pursued.
Comprehensive coverage protects drivers in all situations.
Comprehensive coverage is one type of protection available on an auto insurance policy (others being Collision, Uninsured Motorist, etc.). Comprehensive coverage pays only for damage caused by an event other than a collision, including:
- Weather (hail, floods, etc.)
- Vehicle collisions with animals
I can use Rental Reimbursement coverage to rent a car for my vacation.
Unless your insured car is in the shop as the result of an accident, you won’t be able to use Rental Reimbursement to rent a car for vacation. Depending on the limits you selected when you bought your policy, Rental Reimbursement coverage pays for some or all of the cost of a rental car — but only when your insured car is in the repair shop because of a car accident.
Cheaper cars cost less to insure.
If your cheaper car has a large engine, weighs a lot or is an unusual model, it might cost more to insure than a more expensive small car. However, if you have a cheaper car, you will pay less for comprehensive coverage, which covers damage caused by vandalism, hail, fire or animal accidents.