If you don’t have a “bad car insurance experience” story, you surely know somebody who does. These stories are how myths come to be in the first place. In reality, though, auto insurance policies vary widely, among both different providers and different policy types. So, let’s clear away some of this misinformation and debunk 10 common automobile insurance myths.
1. Purchasing Auto Insurance from a Dedicated Care Insurance Broker Gets You the Best Rate
For the best rates, you have to compare policies and pricing from a variety of insurance companies. If you’re looking for the best plan at the lowest cost, comparison-shopping is the only way to go. You can do this on your own, or you may choose to use an independent insurance broker, as these guys deal with numerous highly rated insurance companies.
2. Your Insurer Will Never Find out if I Have an Accident and Don’t File a Claim
If you have an accident and the other driver sustains injuries or damage to his or her vehicle, that driver will surely file a claim for damages. Once that happens, the other driver’s insurance company files a claim against you and your insurance company. This may increase your premiums. It may also violate a clause in your policy, depending on your responsibility for reporting an accident.
If the police were called to the scene and issued you a citation for the accident, this might also result in increased premiums if the citation appears on your driving record.
3. My Driving History Is the Sole Factor Insurers Use to Determine My Insurance Rates
So much more goes into determining your insurance rates than your driving record, although that does play a part. Insurers also look at your age, as more experienced drivers have fewer accidents. The type of car you insure plays a role, especially concerning the vehicle’s crash-test score. How do you plan to use the vehicle? Do you plan to make mere short jaunts to the store, or are long daily commutes in the cards? Accident probability increases as the amount of time spent driving increases.
What is the car theft rate in your zip code? Lower theft rates equal lower premium rates. How is your credit score? Better credit equals better rates. Finally, most insurers offer premium reductions for students earning high marks. Responsibility in education typically translates into responsible driving habits.
4. If My Car Was Involved in an Accident but I Wasn’t Driving, I’m Not responsible
You may not receive a ticket or citation for the accident if you weren’t driving, but in most states, you face financial responsibility, especially if the person driving your vehicle is at-fault for the accident. Typically, the vehicle’s insurance policy, not the driver’s, pays for damages.
5. My Rates Automatically Reduce Once I Turn 25
Two groups have the highest crash rates: younger drivers and older drivers. Generally, rates do drop after you turn 25, assuming all other information remains the same. This includes all of the factors listed above that help determine your rates, including vehicle type, location, and credit score. Any changes there also affect your insurance rate.
6. If Your Car Is a Total Loss Either Due to Accident or Theft, Insurance Pays It Off
This may be the basis of the most “bad car insurance experience” stories because the truth is that your insurer does not automatically pay off your car (this is why gap coverage exists). Likely, your policy states that it will reimburse the fair market value of your vehicle. This is rarely the amount owed on the vehicle. If you still owe $20,000, but the fair market value for your car is only $15,000, you are responsible for that $5,000 difference. If you owe money on a car and do not have gap coverage, talk to your broker today.
7. I Can Save Money by Purchasing Insurance Online
Auto insurance protects your investment in the event of catastrophe, such as an accident or theft. If you never need to make a claim, you may save money with an online, discount carrier. Those savings typically vanish, though, once you make a claim, as these discount carriers rarely provide the same level of coverage or service. If that happens, you wind up paying a heck of a lot more out of pocket than you would with a traditional carrier.
Additionally, a broker helps you analyze your policy and makes recommendations wherever he or she sees gaps in your coverage, while recognizing possible discounts you may overlook when purchasing your insurance online.
8. An Older Car Costs Less to Insure
Vehicle type influences insurance rates, but that depends on many factors besides the year of the car. When older cars cost less to insure, this is typically because the owner chooses to carry only liability coverage, rather than full coverage. Liability only is less expensive, because you’re only insuring yourself against damage you cause to another vehicle or person within that vehicle. This coverage does not reimburse you for damage to your vehicle.
9. Comprehensive Coverage Covers Everything That Goes Wrong with Your Vehicle
The name “comprehensive” is a bit of a misnomer; it certainly sounds like it covers everything. In reality, though, comprehensive coverage includes damage caused by events other than a collision. This may include theft, fire, vandalism, weather, and collisions with animals.
10. Your Insurance Provider May Not View Your Credit Rating or Use it to Determine Your Premiums
As stated above, most insurance companies not only review your credit history, they use it to help determine your rates. Although statistics don’t fully support the idea, many insurers feel that your credit score makes a good risk indicator. Therefore, higher credit scores result in lower insurance rates.
Do Your Homework
The best way to keep your insurance costs low is to compare the plans and pricing of multiple providers and maintain a clean driving record. San Tan Insurance helps you do the first one quickly and easily. Call us today for a quote!