Auto insurance myths come in various forms; while some are rooted in facts, others are far from anything resembling the truth. Sometimes myths are based on a lack of knowledge of what’s included in a policy. Because so many variables make up auto insurance, it is easy to understand how information gets misconstrued. However, making decisions on possible misinformation can lead to purchasing decisions that may not be the best for your financial or driving needs. Choosing auto insurance based on facts — and not half-truths or assumptions — is the best approach for helping you select the right coverage for you at the best price.
Eight common auto insurance myths
I can negotiate my premium
When you receive a quote for premiums, it is based on the information you have supplied to the insurance provider, plus other factors you may not have control over. Premiums can be assessed based on your location, age, vehicle, miles driven per year, credit score and others, but the rates for each factor have already been determined by the carrier. Car insurance rates are highly regulated, and because of this, there is no negotiating.
What you do have control over is asking the carrier to use as many discounts as possible that apply to you. You can also shop around to compare different carriers since some offer more discounts or other customization options, which can alter your rates.
Parking tickets will affect my premium
Parking tickets, and other non-moving violations, do not generally affect insurance premiums. Insurance premiums are usually affected by moving violations, such as speeding, running stop signs and other similar infractions.
If you do receive tickets for moving violations, it is possible your premiums can increase. If this is the case, you may be able to enroll in a driver safety program or course to help reduce points on a license or remove the violation from your record.
My state’s required minimum coverage is sufficient
Almost all states have laws requiring drivers to purchase a minimum amount of car insurance coverage. These minimum coverage requirements include liability coverage, but can include personal injury protection (PIP), medical payments and uninsured motorist coverage. Each state determines the minimum amount of coverage limits a driver must carry.
However, the state minimums are exactly that - the bare minimum to help pay for injuries and damages to the other driver if you are at fault in an accident. Selecting minimum coverage means the least amount of financial protection you will receive out of all your coverage options. These minimums may be inadequate and may cover very little for medical bills and vehicle damage.
Full coverage insurance covers everything
Full coverage insurance is not a specific type of auto insurance coverage. When referring to full coverage insurance, it generally means a combination of several coverage types, which ultimately provides more robust protection.
Full coverage typically includes liability insurance, a legal requirement in almost every state, plus any other state-mandated coverages. It also includes comprehensive, collision and perhaps other optional coverages like rental car reimbursement and roadside assistance.
My friends are covered if they borrow my car
This is one auto insurance myth based on a gray area in insurance. If someone borrows your car and there is an accident, there are a number of factors involved to determine what insurance coverage applies. If the accident is the other driver’s fault, then their insurance policy should cover your friend’s expenses and the damage to your vehicle. If the other driver does not have adequate insurance coverage, then your own policy may have to kick in.
Coverage in this situation is also determined by the state you live in, your own insurance policy and if your friend has their own auto insurance policy. It also depends on how often your friend is driving your vehicle or if your friend has regular access to your car. For example, if your friend is driving your car regularly and not insured on your policy, your auto insurance may deny the claim. If your friend comes into town to visit you and borrows your vehicle to run to the grocery store, it’s likely your auto insurance would extend coverage from a claim.
If you are unsure if someone else is covered while driving your car, discuss your situation with your insurance agent or carrier and they will be able to help you understand if your coverage would apply.
I should buy a brand new car to save on auto insurance
Buying a brand new car does not automatically mean savings on an auto insurance policy. In fact, insurance premiums can be more expensive for new vehicles, even with a new vehicle discount applied. Many factors determine the cost to insure a vehicle, including the cost of repairs, the likeliness of it being stolen and the engine size, for example.
If you lease or finance a vehicle, will you probably be required to purchase comprehensive and collision insurance. Although these required coverages do offer greater financial protection in case there is damage to your vehicle, they will likely increase the overall cost of your insurance policy.
Comprehensive insurance covers all items stolen from my car
Comprehensive insurance covers a wide range of damages, from hail storms and water damage to vandalism and fires. However, it usually does not cover items stolen from your vehicle that are not permanently attached to your car, like a radio.
While this may be a common insurance myth, other coverage types available may help cover items taken from your vehicle. Your homeowners, renters or condo insurance policy should include personal property coverage, which includes coverage for belongings left in your vehicles. You should verify if your homeowners, renters or condo policy includes coverage for items considered “off-premise” and if it does, then you could file a claim under that policy, which is subject to your property insurance deductible.
No-fault insurance means I’m not liable
There are several states where no-fault insurance laws are mandated. If you live in a state where no-fault insurance is required, it does not mean you are not held liable in an accident or ruled the at fault driver. No-fault insurance is focused on how a driver gets reimbursed for expenses related to injuries, plus getting claims paid quickly.
In states where no-fault insurance is required, your insurance carrier usually pays your medical expenses, lost wages and even funeral expenses first, no matter which driver is ruled at-fault. Then once the fault is determined, the at-fault party’s insurer would cover the property damage costs.
Getting more information on your policy
One of the most effective methods for avoiding a purchasing mistake with insurance is to read your auto insurance policy thoroughly. The declarations page is a great place to start for all your policy details.
In addition to reviewing your policy, you can go on your insurance carrier’s website and find more information or explanations. When you have questions, you should reach out to your insurance agent. If the insurance provider you use does not rely on local reps, then calling the customer service number can get you in touch with someone to answer questions.
The bottom line
While insurance jargon can be confusing and overwhelming at times, there are plenty of options to help navigate through it. By doing research and not relying on myths you may have assumed to be true, you will be able to determine what coverage types and limits are the best for your needs.
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