8 Most Common Car Insurance Myths

There is a lot of misinformation about car insurance floating around social medical and other internet “resources” that can cause drivers to make mistakes when it comes to their car insurance policy. Identifying these myths can help you feel better behind the wheel and as a policyholder. 

To help clear up any misinformation surrounding your auto insurance policy and put your mind at ease, provided below are eight of the most common auto insurance myths—debunked: 

1. The color of your vehicle can affect your car premium.  
   Despite popular belief, the color of your vehicle has no impact on your auto insurance costs. This myth generally comes from an old statistic about the color of vehicle that is most pulled over by police. While there may be some truth there, it does not affect your car insurance policy. 

   When insurance companies are factoring your car into your insurance policy, they’re looking at the other components of your vehicle, such as: 

   • The vehicle’s safety features and ratings 

   • The vehicle’s make, model, year, body type and engine size 

   • The cost to repair or replace the vehicle following an accident 

   
   

2. If someone else is driving your car and gets into an accident, their insurance will cover any damages or injuries.  
   The insurance held by the owner of the vehicle is typically considered the primary insurance in the event of an accident. So, regardless of who was driving when the incident occurred, the vehicle owner’s insurance is what will serve as the primary coverage to help pay medical bills or damages. 

3. Your credit score has no effect on your insurance rates.  
   Your credit score is a significant factor insurance companies consider when they determine your premiums. Your credit score can show insurance agents how well you manage your finances and how likely you are to file an insurance claim. People with good credit tend to pay less for their car insurance since they are seen at a lower risk. 

4. The minimum amount of liability coverage required by your state is adequate.  
   Although purchasing the minimum amount of coverage required by law may reduce your premiums, you may pay more out-of-pocket in the event of an accident. In many cases, it is advisable to select limits that are above your state’s minimum requirement. Severe accidents can be very costly when you consider the rising cost of medical expenses, court settlements and vehicle repairs. Liability coverage gets broken down into two basic segments: 

   • Bodily injury liability coverage: Can help cover any medical bills that may come from an accident if you are found at-fault. Within bodily injury liability there are two subcategories: 

   • Per-person limit is the maximum your insurance will pay per person. 

   • Per-accident limit is the maximum amount of bodily injury your insurance will cover per accident. 

   • Property damage liability coverage: Covers any damages to a person’s personal property. 

   
   

5. If your car is totaled, insurance will pay for your new car.  
   If your insurance reimburses you for a covered total loss, such as your car being totaled, depreciation is taken into consideration. Depreciation is the decreased value of an item over time from the age of the property or wear and tear. Depending on your type of coverage, you may get money for your totaled vehicle, but it will most likely not equal the original purchase price. 

6. Personal auto insurance also covers business use of your vehicle.  
   Driving a vehicle for business purposes has its own set of risks, which requires different types of coverages that your personal auto policy may not cover. If you are using your vehicle for work or driving for a rideshare service like Uber or Lyft, you should check with your insurance agent to confirm that you are properly insured. 

7. The more expensive the car, the more it costs to insure.  
   On average, the value of your vehicle can affect its cost, but not always and not by a significant amount. Premiums are mainly based on how much it would cost to repair or replace your vehicle after an accident, as this is the amount that the insurer will have to pay. If your car model is associated with more accidents or traffic infractions, or is costly to repair, it may be more expensive to insure. 

8. Getting a traffic violation will automatically increase the price of your premium. 
   Getting one traffic violation doesn’t always lead to a higher premium, especially for minor incidents. However, if your violations become more severe or you continue to accumulate tickets, you will probably begin to see an increase in your insurance premium. For example, a single no-fault accident may not raise your rates at all while a DUI could raise your rates by 80%. This is part of the reason why it is crucial to drive responsibly.   

Don’t fall for the myths floating around the internet about your car insurance or your rates. Speak with insurance professionals to make sure you have the right coverage at the right price for your vehicle and location.