7 Car Insurance Myths You Need to Stop Believing Right Now
Find out if you’re getting ripped off on your car insurance in less than two minutes.
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- Myth: Red Cars Cost More to Insure
- Myth: The Minimum Liability Insurance Is Enough
- Myth: Your Car Insurance Gets More Expensive As You Age
- Myth: A Personal Auto Insurance Policy Covers Business Use, Too
- Myth: Acts of Nature Are Covered By Standard Car Insurance
- Myth: You’re Entitled to a Rental Car During an Insurance Claim
- Myth: Smaller Cars Cost Less to Insure
Aristotle once wrote, “It is the mark of an educated mind to be able to entertain a thought without accepting it.” That’s a profound statement, and it’s completely applicable to some of the things you’ve heard about car insurance. Like any subject, information is disseminated that may only be a partial truth or a bald-faced lie. That’s what’s known as a myth.
You can’t believe everything you hear about car insurance, even if it is plausible. Here are seven myths you might’ve heard that can be dispelled right now.
Myth: Red Cars Cost More to Insure
The theory is that red cars (or other bold-colored cars) are more expensive to insure. Folks, it’s only a coat of paint. It has nothing to do with car insurance rates whatsoever. Although other factors like your car’s age, make and model, and even purchase price are considered, the color is not.
Where the myth may come from is that bright red cars could stand out in a crowd. If it draws more attention from authorities, you might pick up an extra speeding ticket or traffic offense, and that can increase your insurance rates. But those changes are associated with your driving record, not the car itself.
Myth: The Minimum Liability Insurance Is Enough
Although you need to purchase a minimum amount of car insurance coverage to legally drive in your state, you shouldn’t be comfortable driving around like that. Should your bare-bones liability coverage be $50,000, for example, you’re likely going to blow through that in a collision if someone is injured. After that’s eaten up, you’ll be left holding the bag on the outstanding charges.
Carefully consider the insurance policy you purchase. Comprehensive and collision coverage should definitely be on your radar, not just basic liability insurance.
Myth: Your Car Insurance Gets More Expensive As You Age
Age does play a factor in car insurance rates, but to the opposite effect. Since insurance is calculated based on risk factors, young people who don’t have a proven driving record typically pay more for their policy. And as you age, you’ll likely find your insurance rates go down, except if you have a history of accidents and offenses.
Myth: A Personal Auto Insurance Policy Covers Business Use, Too
Your personal car insurance policy might cover some aspects of business use, but that isn’t what it’s intended for. Sure, it’s fine to use your car from time to time under most policies, but be aware how much business use your policy allows for.
If you’re using a vehicle primarily for business purposes, it needs to have business auto coverage to prevent any hurdles if a claim needs to be made. You certainly don’t want to tie accident liability to your company, do you?
Myth: Acts of Nature Are Covered By Standard Car Insurance
Be careful about assuming you have comprehensive coverage for things that can be considered an Act of Nature or Act of God. That’s not always the case. Many policies include damage from a hurricane, tornado, flooding, hail, or wildfire as a covered loss, but others don’t. That’s particularly the case if you live in an area prone to one of these losses.
Check your insurance policy for exclusions that may include Acts of Nature. You might need to pay extra for that coverage, which is important coverage you don’t want to be without.
Myth: You’re Entitled to a Rental Car During an Insurance Claim
Car insurance does not always cover a rental car as a replacement while your car’s in the shop for a claim. Your insurance policy needs to state that you have rental reimbursement; otherwise, you’d better hope your shoes are comfortable.
Rental reimbursement coverage is inexpensive but an important part of comprehensive coverage that will minimize the inconvenience of an accident.
Myth: Smaller Cars Cost Less to Insure
Car insurance rates are based on a multitude of factors especially the type of vehicle, the rate of accidents, and the cost per claim. It might seem logical that smaller cars would be less expensive to insure since they cost less, but that’s not necessarily true.
Trucks can be cheaper to insure since the often have less damage in a similar collision to a small car, plus the liability costs are often less since there are fewer passengers, on average. Don’t automatically assume that small cars are cheaper to insure. It’s best to get a quote first.