Illinois drivers often make costly insurance choices based on outdated myths and widespread misinformation. These common auto insurance falsehoods can leave you with inadequate coverage, higher bills, and financial problems when accidents occur. Getting the facts straight can help you make smarter choices that benefit both your wallet and your peace of mind. In this article, we explore the truth about car insurance, answering questions such as “Is insurance higher for red cars?” and attempting to separate car insurance fact from fiction.Â
Coverage Myths That Leave You Financially Vulnerable
Misunderstandings about auto insurance coverage can be dangerous because they create a false sense of security. When drivers think their policies cover more than they actually do, financial problems can hit them hard. These myths often arise from confusing insurance jargon and incorrect assumptions about what “full” or “complete” coverage means.
Myth: Full Coverage Protects You From Everything
The term “full coverage” can trick people into thinking they’re totally protected, but it only means having liability insurance plus collision and comprehensive coverage. That’s more than the state’s minimum liability requirement, but you’ll likely still face out-of-pocket costs over time. For example, full coverage won’t pay for intentional damage, routine car maintenance, or
normal wear and tear. Even with full coverage, policy limits and deductibles can leave you paying plenty. Talking through coverage options with a knowledgeable agent can help you spot potential gaps in your insurance before they impact your bank account.
Myth: Comprehensive Insurance Covers All Damages
Comprehensive coverage might sound like it would cover everything, but in reality, these policies often contain big gaps that surprise many drivers. For example, you won’t be covered for stolen personal items, mechanical failures, or damage caused when driving for business use.
If your laptop is stolen from the backseat of your vehicle, your car insurance won’t pay; you’ll need homeowners or renters insurance for that. Most policies also won’t cover vet bills if your pet gets hurt in a crash or damage from off-roading adventures. Plus, you won’t get help with oil changes, tire rotations, or other regular upkeep costs. For major system breakdowns, you’ll need separate mechanical breakdown insurance.
The list of exclusions often shocks policyholders who thought their comprehensive coverage would handle common problems. Always read the fine print and ask your insurer direct questions about gaps that might affect your situation.
Pricing and Rate Myths That Impact Your Premium
Misconceptions about what affects insurance prices can lead to poor decisions and missed opportunities to save money. In 2021 alone, American drivers spent $311 billion on auto insurance, making it more important than ever to know how rates are actually calculated.
Myth: Red Cars Cost More to Insure
The idea that red cars cost more to insure is totally false. Your car’s color has zero impact on your insurance rates. What actually matters are things such as your car’s make, model, safety history, and how likely it is to be stolen. Insurance companies never look at color when setting prices; your age, where you live, your driving record, and the car’s vehicle identification number all carry much more weight.
The myth about red cars probably sticks around because people associate red with sporty cars and fast driving. But insurers ignore color psychology and focus on real-world risk factors instead. Whether your car is blue, green, red, or purple, the color makes no difference to your insurance bill.
Myth: Your Credit Score Doesn’t Affect Insurance Rates
Many drivers are unaware that their credit history can significantly impact their insurance costs. Your credit score is a good indicator of how well you handle money, and research has shown that those with good credit are less likely to file claims. That’s why people with good credit scores pay less for insurance, it’s that simple.
Drivers with poor credit can pay up to 100% more for full coverage insurance compared to those with great credit. This can equate to paying $1,000 to $2,500 more annually for the exact same coverage. Improving your credit score is a smart way to cut your insurance costs over time.
Financial Protection Myths That Leave You Exposed
Misconceptions about financial protection can leave drivers vulnerable when accidents happen. These myths often arise from incorrect assumptions about how insurance claims and payouts work.
Myth: Insurance Pays Off Your Loan After a Total Loss
If your car gets totaled, your insurance company will only pay what the car is worth at the time of the accident, not what you still owe on your loan. Cars lose value fast, with some depreciating about 20% in the first year of ownership. Some vehicles drop 10% in value during the first month alone. This rapid depreciation can create a situation where you owe more than your car’s actual worth.
GAP insurance fills this financial hole by covering the difference between what you owe and what your insurer will pay. Adding GAP coverage to your comprehensive policy costs just $20 to $30 per year, which is a small price to pay for the financial protection it could give you in an accident.
Myth: You Can Negotiate Your Premium After an Accident
Insurance rates aren’t negotiable; you can’t haggle them down. Your premiums are calculated based on complex formulas and state rules. No amount of sweet talk will change your rate after an accident. However, you can lower your premiums by raising your deductible or qualifying for safe-driver discounts. You might also make savings by bundling different insurance policies together with one insurer. Shopping around and getting quotes from different companies is often the best way of managing costs.
Protect Yourself With the Right Coverage and Knowledge
Understanding the truth behind these common auto insurance myths can help you make smarter choices that save money and offer better protection. Working with a trusted provider, such as American Auto Insurance, helps you avoid costly mistakes. Whether you need SR-22 coverage or want to explore comprehensive protection options, our experts can help you avoid expensive misunderstandings. Don’t let these myths drain your wallet or leave you unprotected, call us at 773-286-3500 to chat with agents who know Illinois insurance rules inside and out and can help you sort fact from fiction.
Woman Standing Near a White Board by Mikhail Nilov is licensed with Pexels License
