Most people we meet today are car owners. But not everyone knows the details of their auto insurance. With so much of information and discussions revolving around auto insurance, people tend to believe myths and false information. Here are 10 of the greatest myths about auto insurance.
One of the most common myths out there about auto insurance is that the color of your car matters. People often associate red cars to speeding and aggression but red does not mean you have to pay more. Auto insurance companies evaluate your premium based on more important criteria like your age, gender, the model and make of your car, the year, body style, engine capacity, parking style (street, driveway, or closed garage), etc.
Credit scores don’t matter
Credit scores indicate your personal ways of handling finances. It’s a look at how well you can manage your expenses within your income. It may be the major indicator for purchasing, renewing, or changing an insurance policy. About 90% of the insurance companies in America consider your credit scores while evaluating premium.
Auto insurance covers whatever is inside the car
Your insurance doesn’t cover any personal valuables you may have justify and lost in your car during an accident. If you had lost valuables like laptops and other gadgets, you might be able to request for the losses through your homeowner’s or tenant’s policy — but you cannot claim it through your car insurance.
Minimum auto liability is more than enough
State laws require a minimum liability coverage. However, that’s insufficient to cover you during an accident. In case of an accident, you might have to pay a large amount from your pocket. It’s better always to get an additional, optional, auto insurance policy. It’s recommended that you get a minimum of $300,000 per accident and $100,000 of body injury protection per person.
Personal auto insurance covers business too
It may come as a surprise, but if you’re self-employed, then your personal insurance will not cover any accidents while you’re on business. In that case, business auto insurance is the best option you have, but it’s best to make sure that you have a good driving history. If you lend your car to employees, make sure they have a good driving record as well.
Auto insurance will pay off total loss of your car
If you think your auto insurance will cover the complete loss of your car in an accident, you’re mistaken. If your car is damaged beyond repair or is destroyed in disasters, your insurance will cover only a fair market value of your car. Fair market value is the original cost of your car after deducting depreciation charges. In most cases, this value would be less than your car loan amount, and you’ll have to bear the difference.
Older drivers pay more insurance premium
It’s the other way round. Old drivers get discounted premiums based on the results of their safe driving course. However, these discounts vary by state and lifestyle of the driver like retirement or unemployment. Before you purchase an insurance, it’s best to check with your company and avail these discounts if you qualify.
Friends driving your car will handle insurance
Even if it had been a friend who drove your car at the time of an accident, your insurance company will hold you responsible for damages to your car. Senior director of personal lines for the Property Casualty Insurers Association of America, Bob Passmore, says, “Your insurance is going to cover any permissive user of your vehicle. If you hand someone the keys, you’ve handed them your insurance.”
Insurance companies may cancel you anytime
Insurance companies would rather keep you than cancel on you. They need a valid reason for canceling your insurance and they would also have to notify you in a written statement well in advance of the date of cancellation. In most cases, you’d also receive guidance on how to renew your insurance or purchase a new one.
Auto insurance covers them all
Auto insurance doesn’t cover every accident under the sky. Your regular auto insurance doesn’t cover certain accidents like theft, vandalism, damages caused by falling trees, hails, flood, fire, etc. To get coverage for accidents like those, you need to purchase the optional comprehensive and collision coverages. But these are additional insurances, and most people who drive old cars don’t buy them to save on cost. For instance, if a car valued at $1000 or anything less than ten times the premium, there’s no point in purchasing the optional coverages. But if you drive a relatively new car and wish to get coverage for all types of damages, you have to purchase both the comprehensive and the collision coverages.
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