Car insurance can be confusing, especially with the amount of misinformation circulating the topic. Falling for the misconceptions out there can lead to costly consequences. Let’s examine five of the most common myths surrounding car insurance and uncover the truths behind them.
1. Color determines the price of car insurance.
Many believe that having a brighter colored vehicle could increase the price of insurance. However, insurance companies primarily focus on many other factors including a vehicle’s make, model, year and safety report. Insurers also take the age, driving record and sometimes the credit history of the driver into consideration rather than color. Therefore, when purchasing your car insurance, the color doesn’t affect your rate overall.
2. “Full coverage” covers everything.
There’s actually no such thing as full coverage. Currently, insurance providers don’t offer a car insurance policy that includes everything in one. However, some consider the combination of comprehensive insurance, collision insurance and liability insurance to be a form of full coverage. The wide range of incidents covered by these three insurance types make them a good starting point for a “full” coverage package. Despite the fact that full coverage insurance doesn’t actually exist, you can still build an insurance package that protects you in the event of an unexpected incident.
3. New cars are always more expensive to insure.
This may not always be the case. The make and model of your vehicle often matter more to insurers than the year it was issued. Safety features are a main contributing factor to your insurance rates, and since newer cars automatically come with safety devices, this can significantly decrease prices. On the other hand, newer cars have more technology built into them, making replacement and repair costs expensive. However, the cost to repair older cars can be high as well, since certain parts are harder to replace as older models become outdated. This makes the cost of repairs and the cost to insure your vehicle, higher.
4. Credit scores don’t affect insurance rates.
This is completely false. Your credit score has a significant impact on your insurance policy. Insurance companies examine your payment history, whether you are looking to renew, change, or purchase a new plan. They also use data analytics to determine the likelihood of you filing for an insurance claim based on your financials. Before you purchase car insurance, look over your credit score and other finances to gauge the type of policy and rate you are likely to receive. This will help manage your expectations as you look for the right car insurance that fits your needs.
5. Car insurance follows the driver.
One big misconception is what happens if someone else drives your car and gets in an accident. Most assume that the individual who gets into the accident, regardless of the vehicle’s owner, will pay the costs. However, this isn’t true. The owner of the vehicle’s insurance policy must pay the premium and cover the costs of any damage. This raises your rates in the future despite the fact that you weren’t the one involved in the accident. For this reason, it’s important to always be cautious about who you let drive your car. Trusting someone with your vehicle could result in major consequences for yourself.
We’ve debunked some of the most common car insurance myths, but it’s important to know there is still a sufficient amount of misinformation out there, so be cautious. When purchasing a car insurance policy, you should have a basic understanding of the factors that affect your policy costs and coverage. If you continue to have questions regarding circulating misinformation, feel free to ask insurance professionals for clarification.
Hosto Financial is available to answer any and all of your questions regarding your car insurance policy. Contact us today.
