Top Seven Auto Insurance Myths
It’s a simple fact of life: If you own a car, you’ll have to carry auto insurance. What is less certain, though, are the facts surrounding what type you’ll need, how much to get and what its purchase will cost you. Not everything you hear is entirely true, so let’s punch a few holes in some of these common myths.
Myth #1: Once I’ve passed the age of 55, my car insurance premiums are bound to rise.
While many people share this belief, the truth is often the opposite. Senior citizens who take and successfully finish a course in accident prevention can often achieve discounts of up to 10 percent on their auto insurance premiums. Furthermore, those who drive less often due to retirement may be eligible for discounts of as much as 5 percent. The actual savings will, of course, vary according to your state of residence as well as your insurance carrier.
Myth #2: My credit rating has no effect on the premium I’ll pay.
While this may be true in some states, most will permit insurance companies to base your auto insurance premiums on your credit rating. Insurers who correlate your credit score with your accident risk assume that those whose scores are higher will drive more carefully, lowering their chances of running their vehicles into a ditch.
Myth #3: Insurers can cancel an auto insurance policy at any time for no good reason.
Legally, they can’t. State regulations prohibit insurers from dropping policyholders in the middle of a term unless the client has missed payments or engaged in insurance fraud. They may also cancel if an accident or disaster has forced them to declare your car a total loss and you make no attempt to replace it.
Any insurer can, however, refuse to renew your auto policy. The commonest reasons for this include:
– A history of past due payments.
– An excess of traffic violations.
– A discovery of misrepresentation or fraud on the part of the policyholder.
Myth #4: A traffic ticket of any kind will send my premiums through the roof.
If the ticket is for a minor offense and your driving record is otherwise pristine, a premium hike is far from inevitable. In fact, even if your violation resulted in an accident for which you were responsible, a policy with built-in accident forgiveness will normally allow you to continue coverage at your existing rate. If your car will be driven by teenagers or other high-risk operators, this can prove a valuable addition to your policy.
Myth #5: If I buy the red car that caught my eye, my rates are bound to increase.
While the undercover trooper hiding in the trees may care about the color of your vehicle, it’s the last thing your insurer is likely to consider. Most will put more stock in such things as your car’s production year, make and model, engine size and body style before concerning themselves with anything else. They will also consider your age, gender and traffic violation history, so if any of these should weigh against you, that high-horsepower sports car will likely cost more to insure regardless of its color.
Myth #6: If my car is damaged in any way, my insurance will pay to repair it.
This is only true for those who have purchased collision and comprehensive coverage. Both are mandatory for anyone who leases or finances a vehicle, but if you choose to drop the coverage once your car is paid off, you’d better drive safely and be careful of where you park it. Without comprehensive and collision to back you up, any damage that might ensue will be your financial responsibility.
Myth #7: If my friend has an accident while driving my car, his insurance will pay.
Car insurance follows the car, not the driver. Your friend or visiting relative may have great insurance of his own, but unless he has borrowed your vehicle without your permission, your insurance will be responsible for covering personal and property damages if he has an accident. Furthermore, unless you have specifically excluded this person from your policy, most insurers will assume that he or she drove the vehicle with your knowledge and blessing.
When you purchase auto insurance, you’ll have many factors to consider. Numerous things can affect your rates, so it pays to determine any discounts for which you may be eligible. Fortunately, the experts at All Kinds of Insurance can help you uncover these potential benefits and assist you in deciding upon the levels of coverage you really need. Give us a call today.