When it comes to auto insurance, there are many myths floating around. Throughout the years, I have heard a lot of reasons why someone believes their insurance rates should be lower (or higher), and many of them are untrue. Regardless of how these misconceptions started, they are deeply ingrained into insurance lore. Below, I bust four of the most common myths about car insurance that I come across on a daily basis.
- I have a red car so I know it will cost more money. You can have a red car, green car, or magenta car – the color has no bearing on your insurance. The year, make, and model are all that matter in respect to what your insurance will cost for a particular vehicle. There are many other characteristics about the car that may affect your insurance rates as well, but car color is not one of them.
- I am over 25 years old so my insurance should be cheaper. People often think that when they reach a certain age their insurance rates should automatically be reduced. The reality is that not every insurance company charges rates that are based on driver age. Some companies do use driver age, but others evaluate how long you’ve been a licensed driver. Because of this variance in the industry, there is no magic age at which your rates will begin to fall. Generally speaking though, younger drivers pay higher premiums than middle-aged and older drivers because younger drivers have more accidents.
- My car is old so I only want the bare minimum insurance coverage. Just because your car has seen better days does not mean you should carry low liability limits. The fact is, you can be involved in an accident and hurt or even kill someone with a jalopy just as easily as you can with a new car. People often gauge how much they want to spend on insurance based on the value of their car. Most of the coverages on an insurance policy deal with injuries you receive or injuries you cause to others. Having a beat up vehicle does not make it less likely that you will be injured or cause someone injuries in an accident. You can decide not to buy the coverage to repair or replace your car, but always carry as much liability and medical payments coverage as you can.
- I didn’t have an accident last year and my car is a year older so my rates should go down. Being accident-free and having a car that’s a year older do not automatically equate to a lower insurance premium. Premiums increase based on a variety of factors including cost of repairs, cost of your vehicle, etc. Many people think their insurance should continue to decrease because their vehicle ages and they have no accidents or speeding tickets. However, inflation has the same effect on insurance that it has on a gallon of milk. Your vehicle’s age does not equate to paying a body shop less money to repair your car or to getting parts to make those repairs at a discount because your car is older (just like getting milk from an older cow doesn’t cost any less!). The cost of insurance relates to the overall cost of your insurance claim in general which includes hourly rates for body shops and mechanics, auto parts, and even lawsuits resulting from accidents, among other things. The more your mechanic charges for repairs or your lawyer charges to defend you, the higher the cost of insurance.
The truth is, auto insurance varies from state to state. To get a better understanding of what factors into determining auto insurance rates in your state, contact your carrier or agent for details.
What other myths have you come across when it comes to insurance? I may be able to bust those as well!The auto insurance coverages described above are in the most general terms and are subject to the actual policy conditions and exclusions. For actual coverage wording, conditions, and exclusions, refer to your policy or contact your independent insurance agent.