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Top 12 Auto Insurance Myths

Top Car Insurance Myths

1. The colour of the car determines insurance rate

For years, people have believed red-coloured cars to be insured at higher rates because red represents aggressiveness and driver’s tendency for speeding. However, in reality, insurance companies have no interest at all in the colour of your car, but they look into other factors.

Do not be fooled into buying cars with colours you think will cost you lesser insurance rates. What car insurance firms look for are the Make of your car, its body type, the engine size and model, the vehicle’s age, etc. Some auto insurers might also consider the car’s sticker price, its safety record and the repairing costs. Thus, if your car owns excellent safety features and gadgets to prevent theft, the insurance rates can drop significantly, but colour will never help.

2. Older cars are cheaper to insure

Since most new cars are expensive than the older ones, it is generally believed they will be costlier to insure. However, this isn’t always the case.

Auto insurance firms look for a number of factors before deciding rate, and the age of your car comes much later in the list. They are usually interested in knowing whether a car possesses modern safety features or not, because these factors directly affect the extent of damages in case of an accident. Since most new cars are now equipped with some of the best safety elements, they can cause you lower insurance rates. Older cars, on the other hand, can lack even airbags, which as a result can inflate insurance costs.

3. Soldiers pay more for insurance than civilians

This myth is a total opposite of the reality. Soldiers or any other members of military – irrespective of the branch they are associated with – receive significant degrees of discount when they apply for auto insurance and they indeed pay lesser than what we civilians normally do.

While some insurance providers grant such discounts on a phone call made to them by a soldier’s commanding officer on his behalf, others normally require documentary proof.

As a soldier, you will have to supply documents to your insurer containing your name, rank and duration of service in the military. This allows them to determine the length of time you are eligible for a discount.

Some insurance firms may offer such discounts to retired soldiers too and in some cases can even extend these concessions to his family members.

4. Insurance cost reduces significantly once the driver turns 25

Car insuranceproviders look for your driving experience rather than your age before deciding insurance rates. Though some firms may consider your age, others mostly look for the number of years you have been driving. Those mulling over age, usually do so because drivers less than 25 years of age come under risky age group where individuals have a tendency for rash driving. Companies then take into account this fact to decide how much you must pay.

However, this is a rare practice and most car insurers collect a variety of data such as driver’s driving style, experience and so on. So, do not be fooled by the myth that beyond 25 you will have to pay lesser – age rarely counts.

5. If others borrow your car, they are responsible for any accident

This is another false perception; all auto insurance policies follow your car and not the driver. If you are lending your car to a friend who crashes it into a truck, you will be held accountable for any damages. You may also be held responsible for any financial losses caused to others because of the incident – not to speak of how your premiums will be affected. So think for a while before you lend out your vehicle to somebody.

6. ‘Comprehensive’ coverage protects the driver and the vehicle fully

A comprehensive coverage never protects the driver and is an optional protection that covers specific areas and not all kinds of damages. If you are purchasing comprehensive protection, do not be fooled for receiving complete protection for your vehicle; instead this protection covers very limited incidents.

Usually, a comprehensive coverage pays for damages caused by fire, vandalism, theft, collision with animals and weather related incidents such as flooding.

7. Personal property within your car at the time of accident is covered

Any insurer will never pay you for damages caused to your personal belongings in the event of an accident. Auto insurance policies only cover damages to the vehicle itself and not any personal property lying in there at the time of accident.

For instance, if your car is broken into and your precious belongings such as laptops, mobiles phones or even cash have been stolen, your insurer will only pay for the damages caused to the car. You might have to file a claim through your tenant’s policy for such non-vehicular damages, but not through the auto insurer.

8. Insurance policy covers the business use of your car

Personal auto insurance does not protect vehicles used for business purposes even if the driver is self-employed. If you are using your car for delivering goods and fall into an accident while performing this job, your insurer may reject any claims you make.

An auto insurance policy always clearly asks if you need to insure for ‘personal/private use’. On personal auto insurance, if you claim for damages caused during a business venture, it is technically incorrect. You need to get a different business policy if you want to use your vehicle for commercial purposes; however such policies are usually expensive.

9. Since thieves prefer new cars, your old car isn’t a threat

If this is what you believe, you are mistaken. Data covered over a period of time reveals that thieves prefer older cars over newer ones for a variety of reasons.

One of the prime factors which make older cars more vulnerable to theft is the lack of safety features found in today’s modern cars. Such vehicles also contain versatile parts which are higher in demand and thus can be sold for greater rates. So, if you are thinking of not to insure your vehicle because it is too old, you need to reconsider your decision.

10. Modified cars are difficult to insure

Nothing is more difficult in this age of technology and finding the right things for yourself online is a matter of mere few clicks. People who tell you that modified cars are difficult to insure, should be ignored straightaway. There are hundreds of auto insurance providers willing to insure your modified car, but finding them needs a bit of homework. If you try a comprehensive online search or contact an insurance broker, you will know that there are several auto insurance policies out there waiting for car rebuffs like yourself.

So, have you been worried recently if or not you will be able to find a suitable insurer for your revamped car, take my word and give your car a do up. There is no dearth of hungry auto insurance providers in the market and you will always find one.

11. Credit score will not affect your insurance rates

Car insurers take a number of factors into consideration before they decide on your insurance rate and credit score is one such factor.

If you ever have been into financial planning you probably know that credit scores affect almost everything from becoming eligible for a loan to interest rates. Allow me to add another detail to this information that these scores also affect your auto insurance rates. Since credit scores are a reflection of how well you manage your finances, auto insurers will look at these numbers before determining your premium rates.

12. Faithfulness to one auto insurance company forever will result in lesser rates

This statement is partially true and is often used as a deception to force customers to stick to one car insurance company for longer. Many car insurers offer discounts to their customers for remaining faithful to them, however, these discounts do not protect them from increasing costs. In other cases, these discounts simply vanish once you make a claim and you are given no privileges for your faithfulness.