Common Car Insurance Myths Exposed
There are a lot of places to find information regarding auto insurance on the internet. Some of this information is true, while some of it is nothing other than an urban legend. Insurance myths can lead to higher premiums if you do not know how to assess current rates and coverage properly.
The color of a car does not raise the premium. If you want to go out and buy that red or black sports car, you can. You will pay just as much for car insurance as you would if you were to buy a pink or plaid sports car.
1) Online Car Insurance is Not as Reliable
This myth is NOT TRUE.
A huge misconception we can thank our parents and grandparents for passing it down to us. Not understanding the Internet, most of the older generation will tend to stay away from things they don’t understand or continue to do it the way they’ve always known to be safe.
The misconception is that online insurance companies provide a “lower” price because the insurance coverage is less reliable or not as good as a brick-and-mortar company.
Fact is, the same auto insurance coverage offered to you from brick-and-mortar companies is the same coverage provided online. No matter where you buy your car insurance, we recommend you always read the fine print to ensure you receive and compare equal coverage.
You may receive cheaper pricing with an online insurance company because their overhead is extremely low. They don’t have to staff offices, pay agents or pay the high cost of utilities. Because of the high level of competition, these companies pass on the saving to the consumer.
2) A Vehicle’s Color Will Affect How Much You Pay
This myth is NOT TRUE.
The color of a vehicle will not increase your insurance rate. Factors that will affect your insurance rate are, the year, make, model, and engine of the car. Also, the driver’s age and driving record will affect the rate you’ll pay.
So if you want to go out and buy that bright red sports car instead of the blue one, you have my permission to buy it today!
3) Males Under 25 Pay More for Car Insurance
This myth is both TRUE and FALSE.
Sorry guys, the car insurance companies will get you twice during your life. Once as a young man and then when becoming a senior citizen.
Statistics show that males under 25 will pay more for car insurance than females in the same age group.
Across the age range of all drivers, seniors and teenagers pay the highest for car insurance because they are typically in more accidents.
4) The Car I Bought is Automatically Covered
This myth is TRUE.
However, most insurance policies require you to notify your car insurance agent or company with the new car’s information within a specific time.
To be safe, you should notify your agent as soon as possible when purchasing a new or used car or adding a vehicle to your current insurance policy.
5) A Friend Wrecks My Car, His Insurance Will Cover Me
This myth is FALSE.
This may not seem fair, but it’s your car and your responsibility. Your friend’s insurance may kick in to help pay for any damages that exceed your insurance coverage.
Also, your friend getting into an accident will go on your insurance record, and your premiums may go up. It would be best if you always thought twice before letting a friend drive your car.
6) Personal Credit Does Not Affect My Car Insurance Rates
This myth is FALSE.
Every day more and more car insurance companies are taking into consideration your credit history and score when you purchase, renew or change your auto insurance policy.
Insurance companies have found a direct correlation that people with bad credit also carry a higher insurance risk.
7) Cheapest Rate is Best for Me
This myth is NOT TRUE.
Don’t get me wrong; price is a significant factor when selecting a car insurance policy. However, it should not be the only consideration when shopping for car insurance. You must choose the right policy coverage level to ensure you protect yourself in case of any unforeseen problems.
Since the level of competition in the car insurance market is so high, insurance companies will strip out some aspects like windshield coverage that used to be standard to cut their premiums.
When shopping for car insurance policy prices, you must not only shop for the level of coverage you need, but when shopping for different insurance companies, you’re also comparing apples to apples.
8) Insurance Companies Reward Loyalty
This car insurance myth is FALSE.
You would think that insurance companies would give their best deals to their most loyal customers, but that’s not how it works.
Most insurance companies will reserve their most competitive deals to recruit new customers and rely on their long-time customers to be too lazy and comfortable to shop around once their current policies come up for renewal.
There are very few insurers that will reward you for being a loyal customer with them. If you find one, you should read the fine print to ensure you save more money than the money you would save by taking the time to shop around.
It is worth your time to see how much money you can save by switching to a competitor. Even if you’d like to stay with your current insurance company, you can ask them to match the best quote you received by shopping online elsewhere.
9) No-Fault Means it’s Not My Fault
This myth is FALSE.
Many car insurance buyers do not understand the term “no-fault” when used in car insurance terminology. No-fault personal injury protection (PIP) is not available in all states.
No-fault car insurance coverage means your car insurance will pay for your injury-related bills regardless of who is at fault at the time of the accident.
Shopping for a New Car?
Before visiting a dealership to buy a new car, it’s essential to know the dealer invoice price and what other people are paying for the vehicle in your local area. Otherwise, you won’t know a reasonable price to pay for any car you’re looking to buy.
Learn how to have dealers compete with each other online before ever stepping foot inside a dealership to guarantee you pay the best new car price and avoid any modern-day car dealer scams.
I highly recommend using an online referral service such as Ryde Shopper or Motor Trend. Their quotes will automatically include any discounts or cash-back incentives currently available in the marketplace.
About the author
My name is Carlton Wolf, and I’ve been in the car business since 1994, both retail and wholesale. I created the Auto Cheat Sheet to better educate buyers about the deceptive sales practices used by many dealerships throughout the country. Please understand that not all car dealers are dishonest. However, you never know who you’ll be dealing with, though. I’m willing to share my knowledge and experience with anyone who listens. Keep in mind that I’m a car guy, not a writer.
