Six Auto Insurance Myths

Six Auto Insurance Myths

August 10, 2016
auto insurance myths
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“You shouldn’t believe everything you hear!” This old saying has helped keep a lot of people out of trouble for hundreds and maybe thousands of years. Even today, it’s still a good piece of advice, especially when it comes to auto insurance. Believe it or not, there are a lot of auto insurance myths out there, false stories that tend to cause a lot of trouble for those who are not well informed.

Below, you’ll find a list of the most common auto insurance myths, to help you differentiate between truth and fiction.

1. You only need to have the minimum amount of auto liability insurance required by the law

This myth is so popular because people want it to be true. The law requires you to have the minimum coverage. But accidents don’t really care about the law. And they usually tend to cost a lot more than the minimum limits. So although the law does not force you to get adequate coverage, you should. It’s the only way to really protect yourself.

2. Your insurance will cover you if your car is stolen or damaged by natural disasters

This myth is actually half true. Your insurance can protect you if your car is stolen, vandalised or damaged by falling trees or floods, but only if you have the right type of insurance. If you get comprehensive and collision coverage along with your standard liability policy, you will be protected.

But these optional coverages will cost you. So it might not be such a smart investment if your car is worth less than $1,000.

3. You pay more for your car insurance as you get older

This is another false myth. Drivers over 55 years of age can actually get a discount of up to 10% from their insurers, especially if they successfully complete an accident prevention course. And you can also get a discount of up to 5% if you are retired or not employed full time.

There’s another version of this myth out there and it says that soldiers pay more for insurance than civilians. It is also not true, as members of the military can get discounts from insurance companies for the entire duration of their service.

4. If you loan your car to other people, their auto insurance will cover them in case they are involved in an accident

The owner’s insurance company must pay for damages caused by an accident. It doesn’t matter who’s driving. This is the law in most states. So think twice before letting others drive your car.

5. Red cars cost more to insure

This is one of the silliest myths out there. Some people actually believe that red cars are more likely to be ticketed because of their arresting, bright color. Or that they can be involved in accidents more often because most sports cars are red.

The myth is, of course, not true. Your insurance company will look at the make of your car, at the model, body type, engine type, the age of your vehicle, your driving record and your credit history, but not at the color.

6. Your credit doesn’t affect your insurance rate

No matter what you hear, your credit-based insurance score matters. It shows how well you manage your finances, and many insurance companies take it into consideration when you go to do business with them. Good credit can help you pay less for insurance!

Thomas Hookton is a finance journalist, history buff and science fiction connoisseur. Hit him up via email.

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