Believing false information can cost you money. To help prevent this, here are a few of the most commonly circulated myths about auto insurance.
A Red Car Cost More?
Myth: Red cars are more expensive to insure.
Truth: The color of your vehicle has no bearing on your insurance premium. Auto insurance rates are generally defined by your cars:
Make
Model
Engine size
Body type
Age
• Driver age
• Your driving record
• Your credit history
Addition rate calculations are the car’s sticker price, repair costs, safety record, and how popular it is with car thieves.
My Rates will increase if I Report an Accident
Myth: My rates will stay low or the same if I never have an accident.
Truth: If you get into an accident with another driver, it’s likely that driver will file a claim for damages or injuries. If they do, it will only be a short time until the injured party’s insurance company files a claim against you and your insurance company. Once this happens, you premiums may increase.
Furthermore, if the police were involved because of a crash and you were issued a ticket, it can appear on your driving record and trigger a premium increase. Therefore, it’s easier to face the music upfront.
Your Insurance Company will Pay Your Loan if Your Car is Totaled
Myth: If your car is totaled due to an accident your auto insurance company will pay off your loan in full.
Truth: If your car is a total loss, your insurance company will pay off the fair market value.
Fair market value is the original cost of your car, less depreciation. Typically, this amount is less than the balance of the loan; you are responsible for the difference.
Your Age Affects Your Premiums
Myth: Insurance company rates are set higher for older drivers because they have more accidents due to poor vision and slowed reflexes.
Truth: Your credit history sets your rates in most states except California.
The most important factor to an affordable rate is driving safely and maintaining a clean driving record.