We all know that choosing a comprehensive car insurance policy is one of the best ways to protect yourself and other road users when you’re behind the wheel. However, most of us are a little fuzzy on the details. It’s little wonder then that myths about auto insurance abound. Wonder about the nitty-gritty no more. We’re here to set you straight by busting these top auto insurance myths.
1. Myth: Red Cars Attract Higher Insurance Rates
Most of us know that red cars don’t really go faster, but many of us still think insurance companies slug the drivers of red cars more. The good news is that insurance companies don’t care whether your car is red, black, blue, or any other hue. There is no link between a car’s color and the cost of insurance rates.
That doesn’t mean a car’s paint is irrelevant though. Standard insurance policies do not usually cover repainting cars with custom paint jobs after accidents. If you want this protection, you’ll pay more for it.
2. Myth: It Costs Less to Insure Small Cars Than Larger Vehicles
It makes common sense that the insurance rates for small cars would be lower than those for larger vehicles. However, there isn’t a direct link between car size and insurance rates either. Other factors such as the car’s value and engine size also come into play. That’s why insuring compact hatchbacks can be very affordable, but insurance rates for small, sporty coupes can be relatively expensive.
3. Myth: You Can Cancel an SR-22 Policy After Receiving Your License Back
Motorists must get an SR-22 policy after committing serious traffic infringements, such as driving under the influence or having an accident in an uninsured car, to get their driving privileges back. Don’t assume you’re off the hook once the DMV returns your license though. You need it as long as the DMV deems you might have a high-risk policy. That could be up to five years, depending on your offense. Talk to the DMV before canceling your SR-22 to make sure you have met your obligations. Otherwise, you may face fines or other penalties.
4. Myth: You Only Need the Minimum Insurance
While each state sets a minimum auto insurance requirement, that doesn’t mean that’s all the insurance you need. If you have an accident, choosing only the minimum policy amount will cost you much more in the long run.
Imagine you have property damage liability coverage of $25,000 but have an at-fault collision with a BMW or Mercedes-Benz. You would be expected to cover the rest of the cost to fix the other driver’s vehicle, which could amount to tens of thousands of dollars. Your minimum insurance also wouldn’t cover any damage to your own vehicle or any injuries you sustain since comprehensive and collision coverage isn’t required by any state.
Start crunching the numbers and you’ll soon see that taking out the minimum insurance could be a costly mistake. Choose a policy that won’t leave you paying more than you can afford if the worst happens.
5. Myth: You Have a Full-Coverage Policy So You’re Totally Protected
A full-coverage policy sounds like it provides total protection, but this isn’t entirely true. A full-coverage policy usually covers you for up to $10,000 of personal medical expenses and $10,000 in property damage. This is in addition to the protection you receive for damages to other people and their vehicles under the standard liability insurance.
While that might initially sound generous, the money doesn’t really go a long way. If you are involved in a serious accident, the medical bills could easily exceed these figures. The average American spends more than $36,000 on a new vehicle, more than three times the full coverage property damage limit, so you’ll probably have another shortfall if your car is written off.
In the liability versus full coverage comparison, full coverage certainly provides greater protection. But don’t get overconfident. You may still have a shortfall if you cause a serious motor accident, so make sure you have the emergency funds to cover that.
6. Myth: Men Pay More for Auto Insurance Than Women
There is some truth to this rumor, but it is by no means a hard and fast rule. Young men typically pay higher insurance rates than young women because insurance companies believe they are riskier drivers. However, once men and women get a bit older, any price gap that may have existed between the genders becomes negligible. In fact, insurance providers in some states, including California, Pennsylvania, and Massachusetts, cannot legally consider gender when calculating insurance rates.
7. Myth: A Friend Who Borrows Your Car and Has an Accident Becomes Financially Responsible
We’d all like to think we’re only responsible for the accidents we cause. However, that’s not quite how it works in the real world. Insurance is tied to the car, not the driver. That means if you lend your car to a friend, you’re financially responsible for any accidents they get into while they’re behind the wheel. You’ll pay the deductible on any collision claims you file. If injury claims exceed your liability insurance’s policy limits, then your friend’s insurance may become involved, but this depends on where you live. Of course, any good friend will reimburse you for any out-of-pocket costs you incur, but they don’t have to by law.
8. Myth: Your Insurance Company May Cancel Your Policy If You Have an Accident
Many people worry about their insurance company dropping them after an accident, especially if their track record is far from spotless. However, in reality, your insurance company can’t simply cancel your insurance policy because you’ve had an accident. They can only cancel policies for fraud or nonpayment. So long as you have a valid driver’s license and pay your premiums on time, your policy will stand, at least until renewal time.
Your insurance company may refuse to continue your policy at the end of your insurance term if your driving record is particularly bad. However, it’s more likely you’ll pay a higher rate when renewing your policy.
We’ve debunked some of the most common auto insurance myths, but we know there is still plenty of misinformation out there. Do you still have questions about your car insurance policy? Give us a call to learn the truth about your auto insurance plan.