The Top Myths About Auto Insurance

December 21, 2019

You need car insurance if you drive a car on the road – it’s the law. But many people believe crazy myths about how car insurance works. Keep reading to debunk the top myths and make the most of your car insurance purchase.

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Myth: The Minimum State Required Insurance is Enough

Each state has a different amount of insurance required, but it’s typically not adequate to cover you in the face of an accident. The state typically requires liability insurance. This insurance covers the other parties in the accident – not you. If you cause an accident liability insurance covers what happens to the other people and cars on the road. You need collision and medical coverage for your own protection.

Also, pay close attention to the minimum liability requirements in your state. You may want to hold more insurance than what they require. The minimum amount required in many states isn’t enough to cover the cost of a serious accident that involves property and personal liabilities. Think of the worst-case scenario and purchase enough insurance accordingly.

Myth: You Aren’t Responsible if Someone Else Crashes Your Car

If someone drives your car with your permission, you are responsible for any damages. The insurance coverage is for the car, not the person. Granted, if your insurance policy doesn’t cover ‘other drivers’ you may find yourself without any insurance coverage for the damages. Use caution when letting others drive your car and always ask your insurance agent if you are unsure if another driver will be covered.

Myth: Your car’s color determines your insurance premium.

The color of your car actually has nothing to do with your insurance premiums. Insurance companies base premiums on the likelihood of an insurance claim. What matters is the make and model of your car. They also look at the type of engine, vehicle’s age, and cost. Insurance companies use data on each type of car and its likelihood of being involved in an accident to determine your premiums.

Of course, your premiums are also determined by your personal factors. Your age, gender, and driving record play a role in the final premium. So it doesn’t matter if your car is white, red, or black – the premium will remain the same; it’s the other factors you need to watch.

Myth: If you have insurance, your car is covered from any peril

Your car is only covered by the insurance coverage you purchase. For example, if you don’t purchase comprehensive coverage and your car is stolen, your insurance won’t’ cover it. Collision insurance doesn’t cover theft.

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Read the fine print of your coverage carefully. If you worry about a tree falling on your car or someone stealing it, you need comprehensive insurance. If you drive the car on the road, you need liability insurance to protect the other cars and collision coverage to protect your own car.

Myth: Tickets automatically increase your premiums

Yes, a ticket may increase your premium, but it doesn’t have to. It depends on the circumstances of the ticket. Was it your first offense? Was it a minor offense? You may not see any increase in your premium if this is the case.

Myth: Your insurance covers business use of your car

Personal auto insurance is for personal use. If you drive for Uber or Lyft or use your car during business hours to conduct business, the insurance company can deny your claim. If you use your car for business, make sure to tell your insurance carrier about it. You’ll need a different type of policy. If you neglect to tell the insurance company and they find out that a claim is a result of business use of the vehicle, they could deny the claim.

Myth: Full coverage protects you

There is no such thing as ‘full coverage.’ Each person needs different types of coverage. Yes, some insurance companies have packages that they claim are full coverage, but what does that mean? Look at the fine print. Know the coverage and decide if it’s enough or too much. Sometimes you may pay for coverage you don’t even need.

What means full coverage to you may mean something else to the next driver. Do you need things like roadside assistance or rental reimbursement? These may or may not be included in a ‘full coverage’ package. Break the package down and truly know what you are getting.

Myth: My personal property is covered that’s inside my car

If your car is stolen, don’t assume that the belongings inside will be covered with your auto policy. Unless you have a rider on the personal belongings, your auto policy probably won’t cover the loss of those items. Instead, your homeowners or rental insurance should cover the personal belongings, assuming you have coverage.

Auto insurance helps protect you financially in the face of an accident. Choosing the right coverage is crucial to your financial peace. Pay close attention to the coverage you get, the premiums, and the deductibles. Make sure it’s an affordable amount that provides the coverage you need should you be involved in an accident.

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