All insurance policies have one thing in common – they are confusing to read. The flood of regulations, fine print, terms, and conditions may be too much to handle for the average person. At times like this, you will depend on the one entity that knows it all – the internet. However, there are times when the wrong information, “fake news,” or untrue rumors, are being spread across the internet. Don’t be a victim of these pseudo-truths; below, we will debunk the most common auto insurance misconceptions.
1. Nobody Wants to Steal My Old Vehicle, So I Don’t Need Comprehensive Coverage
You might have an older vehicle. You feel comfortable dropping collision and comprehensive coverage because you believe your vehicle isn’t a target for theft. Unfortunately, older vehicles are often targeted more than newer vehicles. The National Insurance Crime Bureau reports that car thieves prefer older vehicle models because they’re easier to steal. The report from 2007, for example, listed the 1995 Honda Civic, 1991 Honda Accord, and 1989 Toyota Camry as the most popular cars to steal (they were the top 3 vehicles stolen across the United States in 2007). The 2016 report, meanwhile, lists the 1997 Honda Accord, 1998 Honda Civic, and 2006 Ford Pickup as the top three most common vehicles to steal. Ultimately, it’s a good idea to have comprehensive coverage (which covers theft) on any vehicle – old or new.
2. My Car is Protected Against Vandalism, Hail, Storm Damage, Flooding, and Theft
Many drivers have incorrect ideas about their insurance policy. They mistakenly believe that their cars are protected against vandalism, hail damage, storm damage, flooding, and theft, for example. In reality, only drivers with comprehensive coverage will be protected against these events. Drivers with liability coverage or collision-only coverage will not be protected. That means you’ll need to pay totally out of pocket.
3. My Credit Score Doesn’t Affect My Car Insurance Rate
Many drivers are surprised to learn that credit score has a major impact on insurance rates. Car insurance companies take a variety of factors into account when calculating insurance rates – and they’ll absolutely check your credit score. Your credit score tells your insurance company how good you are at managing your financial affairs. Drivers with a poor ability to repay loans – or a lot of existing loans – will pay higher car insurance prices than drivers with high credit scores.
4. The Possessions Inside My Vehicle Are Covered Under My Car Insurance Policy
Let’s say you get into an accident with your expensive golf clubs in the trunk. Somebody rear-ends your vehicle and your clubs are ruined. Or, let’s say someone steals your high-end laptop from your vehicle while it’s parked overnight. You might assume your personal property is protected – but this isn’t always the case. You cannot file a claim for personal property with your car insurance provider. You can, however, file a claim through your homeowner’s insurance policy – or tenant’s insurance policy. This policy typically extends to possessions stored within your vehicle. However, those without homeowner’s insurance or tenant’s insurance are out-of-luck.
5. The color of my car affects my insurance premiums and deductibles.
This is one of the biggest auto insurance myths that have been circulating online – how is it even possible for the shade of your car to determine your auto insurance premiums? Won’t it mean that the company will have to revise your auto insurance rates every time you put a new set of colors on your car? What if you have more than color on your vehicle?
In reality, your auto insurance rates are determined by factors more tangible than colors, such as, among many other factors, age and years of driving experience of the driver, age of your vehicle and safety features of your car.
6. No-fault insurance absolves you of any blame in any accident.
Taken literally, no-fault insurance might actually sound like a wonderful coverage – with this coverage, you’ll be completely free from any blame in an accident, since it is “no-fault”, right?
Wrong. This is a common misconception – no-fault insurance only allows all parties involved in the accident to claim their insurance payout for immediate medical treatment, while the insurers of the parties involved decide which company should be the one to pay the other company.
This essentially means that the company will pay the medical bills for you first. However, when the verdict is out, and if you’re found to be the one at fault, and you will be responsible to pay for damages. Of course, the insurer will pay for you, but that will mean increased premiums for you in the future.
7. If my friend crashed my car, his insurance policy is applicable as well.
Auto insurance packages are tagged to the vehicle, not the driver. As such, if another person drives your car, and gets into an accident, the claims will come from your insurance policy, not the other driver. The guy who crashed your car will not be required under the terms and conditions to claim payouts for your vehicle.
However, for coverage that are non-vehicle specific, such as the comprehensive coverage, he can be asked to claim that coverage for himself to help you offset your insurance claims.
8. My auto insurance policy covers everything – I’m definitely safe!
This is another common misconception – what covers you depends on the coverage that you have bought, not the policy itself.
For example, you might be benefitting under the collision coverage, which covers any damage from collision of your vehicle with an object or another automobile. However, that does not cover any bodily injuries that you might have sustained during the collision. You must look through the coverage that is included in your policy to determine the payout that you are eligible.
9. Your premiums will not increase if you’re not the party responsible for the accident
In an ideal world, you won’t have to pay for increased premiums if the accident was not caused by you. It stands to reason – you’re not at fault, so why should premiums rise for you?
However, the world isn’t perfect – you’ll still be slapped with increased premiums whoever was at fault. Insurance companies see any accidents as an indicator that you’ll be more likely to be involved in another accident.
10. A speeding ticket will increase your premiums
However, on a brighter note, rumors that a ticket will drastically increases your insurance premiums are largely untrue. If the ticket is for a minor offence, and you have a clean record, there’s no reason why the premium will increase for you.
However, do note that for more serious offences or repeated offences, your insurance company may deem it fit to increase your premium, in view that it is more risky to insure you compared to other road users.
With these myths debunked and dispelled, you can now put your minds at ease. Next time you buy insurance policies, know that these untruths will not affect how much premium you have to pay. Read the terms and conditions carefully, and clarify any queries with your insurance agents – we don’t need even more false rumors running around the net as it is.