*Updated December 30th, 2025
You need auto insurance if you drive a car on the road—it’s the law. But despite how common car insurance is, many drivers still believe outdated or flat-out incorrect insurance myths. These auto insurance myths can lead to gaps in coverage, higher insurance costs, or unexpected out-of-pocket expenses.
Below, we break down seven common auto insurance myths so you can better understand how your auto insurance policy really works—and how to choose the right auto coverage for your needs.
Myth: The Minimum State Required Insurance Is Enough
Each state sets its own minimum amount of auto liability coverage, but that doesn’t mean it’s enough to fully protect you. In most cases, state-required liability insurance only covers damage you cause to others—not your own vehicle or injuries.
If you cause an accident, liability insurance covers the other driver’s damages, but you’ll need collision coverage and medical coverage to protect yourself. Many drivers discover too late that the amount of auto liability coverage required by law is far less than what’s needed for a serious accident.
In many cases, the minimum coverage is less than 10 times the insurance premium you could face after a major claim. Paying a bit more now can prevent paying far more later.
Myth: You Aren’t Responsible if Someone Else Crashes Your Car
If you allow another person to drive your car, your car owner’s insurance typically applies—not theirs. This means your auto policy is usually responsible for damages, and the owner’s insurance company must pay first.
However, some auto insurance policies exclude certain drivers. Always check with your insurance agent before allowing another person to drive your vehicle. Otherwise, your auto insurance may not protect you at all.
Myth: Your Car’s Color Determines Your Insurance Premium
Your car’s color has nothing to do with your auto insurance premium. Insurance companies calculate rates based on risk, not appearance.
What actually affects your insurance rate includes:
-
Car make and model
-
Age of the vehicle
-
Cost to repair
-
Likelihood you’ll file an insurance claim
Your driving record, age, and even credit-based insurance score also factor into your auto insurance pricing.
Myth: If You Have Insurance, Your Car Is Covered From Any Peril
This is one of the most dangerous car insurance myths. Your insurance covers only what you purchase.
For example:
-
Collision coverage covers accidents
-
Comprehensive insurance covers theft, vandalism, fire, or weather
If your car is stolen and you didn’t purchase comprehensive and collision coverage, your insurance company must pay nothing.
To fully protect your vehicle from all types of damage, you need both comprehensive and collision insurance.
Myth: Tickets Automatically Increase Your Premiums
A traffic ticket can raise your car insurance premium, but it’s not guaranteed. Whether your insurance rate increases depends on:
-
Severity of the violation
-
Whether it’s your first offense
-
How many insurance companies take your driving history into consideration
Some violations don’t affect your rate at all—especially if you have an otherwise clean driving record.
Myth: Your Insurance Covers Business Use of Your Car
Personal auto insurance may not cover business use. If you use your vehicle for work—delivery, rideshare, or client visits—your insurer may deny a claim.
If you drive your car for business, you may need to purchase business vehicle insurance. Failing to disclose business use could mean your insurance carrier refuses to pay damages.
Myth: “Full Coverage” Protects You From Everything
There is no universal definition of “full coverage.” Some auto insurance companies bundle policies, but coverage still varies.
So-called full coverage usually includes:
-
Liability
-
Collision
-
Comprehensive
But optional coverages like rental reimbursement or roadside assistance may not be included. These coverages may not be cost effective for everyone.
Always review what’s included and decide what helps you avoid paying more out-of-pocket for losses.
Myth: Personal Property Inside Your Car Is Covered
If your car is stolen, items inside it usually aren’t covered by your auto insurance policy. Instead, your homeowners insurance or renters insurance may apply.
Unless you’ve added a rider, your car isn’t responsible for protecting personal belongings.
Final Thoughts: Understanding Auto Insurance Myths Saves Money
Believing common auto insurance myths can lead to higher insurance costs, denied claims, and financial stress. Understanding what auto insurance will cover—and what it won’t—helps you choose smarter coverage.
Before purchasing or changing a policy:
-
Review your insurance premium
-
Understand deductibles
-
Talk to an insurance agent
-
Compare policies across insurance companies
The right car insurance protects your finances, your vehicle, and your peace of mind.