Believing in certain myths about auto insurance can lull you into a false sense of security and mean you have to deal with high costs later. Here are our top five car insurance myths--understanding these can help you protect yourself and be well-informed when you compare auto insurance quotes.
The government doesn't actually set insurance rates; your state's insurance department only regulates what individual insurance companies are allowed to charge. Getting auto insurance quotes can save you lots of money, since insurance company premiums can vary widely. Each insurer will set a rate for you based on variables, including your:
Many people believe that thieves prefer new cars to older ones. The truth is, new cars are more difficult to steal, so thieves often target older vehicles. According to the 2009 National Insurance Crime Bureau and reported by Fox Business, some of the most often stolen vehicles include the:
Additionally, many people keep their cars longer in a challenging economy, creating a market for older car parts. Thieves readily profit from this by selling off parts of the older cars they steal.
Depending on the value of your older car, you may want to maintain comprehensive insurance coverage. Basic liability coverage won't protect you if your car is stolen.
Auto insurance myths sometimes arise from imagery. A shiny red car may evoke the image of a daring, free-spirited adventure for many people. Insurance companies, however, have not found red cars to pose a higher risk of loss than vehicles of any other color. The color of your car will not in any way affect your auto insurance quotes. When setting premiums, insurance companies consider the vehicle's:
One of the most costly auto insurance myths is that your car insurance will cover what you owe on your car if you total it. The truth is, your vehicle is only insured for its worth at the time of the accident, minus your deductible. Since your car is constantly losing value, your beautiful, fairly new car may already be worth less than you owe on it.
If you are carrying a large car loan or leasing your vehicle, you may want to consider purchasing gap insurance, which covers the difference between the value of your car and the amount of your loan.
Read your policy carefully; it may not include coverage for a rental car. You can purchase affordable rental car coverage, but the payout may be less than the cost of renting a car.