Like many urban legends, the stories behind how car insurance myths got started may never be known. Still, like rumors in high school, they’ve spread like wildfire. Some people may actually believe whatever they’re told, and that can cost them in the long run.
Don’t fall for the traps that people have set over the years. Know the facts so you can save some cash. Here’s eight common car insurance myths, debunked for your safety.
Red Cars Cost More to Insure
As soon as you tell your insurance company you have a red car, they jack your rates up, right? Of course not!
The color of your car has absolutely nothing to do with your rates. What does matter, however, is the following: the make, model, body type, age and engine size of your car, as well as your age, driving record and credit history.
It’s Cheaper to Insure an Older Car
Your old car may have carried you through the best and worst of times. Unfortunately, one thing it won’t necessarily save you from is cheap insurance.
So many things about you and your car are taken into consideration when assessing rates that it doesn’t really matter how old your car is. You can, however, choose to carry liability coverage, which covers damage to other people and property, but not you. This is cheaper than having a full package.
If Someone Else Crashed My Car, I’m Not Responsible
Your buddy got a little tipsy last night and decided it would be a great idea to test-drive your prized sports car. Next thing he knew, he was wrapped around a pole. Should he be responsible for the accident?
Nope – it doesn’t matter who the driver is. Car insurance companies only track the car. That makes you responsible for any damages that happen.
You may be thinking, “But what if I have a no-fault policy?” This only means that each person involved in the accident’s insurance company pays for injury-related bills, regardless of whose fault it is.
If My Car Is Vandalized or Damaged by Weather, I’m Still Covered
Unless you request additional coverage – protection from elements like this is usually included in comprehensive and collision coverage – you won’t be protected from these incidents. Comprehensive and collision coverage is optional in an insurance policy.
That means if your car is keyed or a tree falls through your windshield, you don’t automatically receive coverage. If you’re financing or leasing a car, however, this type of coverage comes in the form of riders.
When I Turn 25, My Rates Drop
It’s not just your age that insurance companies consider when determining your rates. The only way this myth could be possible is if all your information about you and your car stays the same when you turn 25.
Changes in all the information the company has collected about you, however, influence rates. These factors include age, vehicle information, claims experience of similar customers to you, and your claim history.
Car insurance can go down, though – but due to different causes.
My Personal Property Inside My Car Is Covered
If your prized guitar gets snapped in two during an accident, it’s probably best to get over it quickly. Car insurance does not cover anything inside your car, just the car itself. Your homeowner’s insurance, however, can cover damaged or stolen items.
My Credit Score Doesn’t Affect My Rates
You may think that insurance companies can’t see your credit, or that it’s not used as a factor in determining premiums.
Sadly, in most states companies can view your credit history and assign a credit-based insurance score to you, which indicates the likeliness of you paying a loan on time. Some companies even believe that your score indicates your accident risk. Sorry, people with low scores – you might as well be daredevils in their eyes.
If I Get a Speeding Ticket, My Rates Go Up
There are more factors that companies take into consideration besides a ticket. Your driving history, the amount of time you’ve been with your company and how fast you were speeding can all affect your rate.
Remember kids, don’t always believe everything you’re told. If you like money – and there’s a good chance you do – it’s best not to take these facts lightly.
This article came from our friends at Phroogal and can be found on their website here.