Top 10 Car Insurance Myths Debunked
1) Your credit score doesn't impact your insurance rate
While credit score might not feel relevant for car insurance rates, as of 2024, California, Hawaii, and Massachusetts are the only states where credit score is not considered a rating factor. If you live in any other state, insurance companies will use your credit score as an indicator of risk, and it will impact your premium. In fact, drivers with excellent credit pay an average of 17% less for car insurance while those with poor credit pay 91% more.
2) Red cars cost more to insure
The car you drive does impact the price you’ll pay for insurance. However, the color of your vehicle will not impact your insurance rates. Insurance companies look at aspects such as the make and model of your car as well as your driving record to set rates. The only time you would need to disclose the color of your vehicle to your insurance company is if you have a custom paint job you want your insurance to cover.
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3) All insurance companies provide the same coverage
The truth is, no two insurance companies are built the same. Insurance policies from different providers can vary widely depending on factors such as coverage level, exclusions, and limits.
4) The more expensive a car, the pricier it is to insure
While newer, more expensive vehicles usually cost more to insure, the cost to repair and replace parts matters much more than the purchasing price of a vehicle when it comes to insurance rates. Additionally, newer cars sometimes have safety features or qualify for other discounts can bring insurance costs down.
5) You only need state-minimum liability insurance
While most states enforce a minimum coverage level for liability insurance, it likely will not be enough if you are involved in an expensive accident. Opting for only the minimum required insurance means that you will probably end up paying more out of pocket in the event of an accident.
6) Comprehensive insurance covers everything
Contrary to its name, comprehensive insurance is not really comprehensive. Comprehensive coverage is designed to cover incidents that are not covered by other aspects of your insurance policy, but it does not cover everything. For example, comprehensive coverage takes care of collisions with an animal, weather damage, and fire damage, but doesn’t cover collisions with other vehicles or accidents involving an uninsured motorist.
7) You can negotiate your premium
Unfortunately, negotiation isn’t an option when it comes to car insurance premiums. Insurance companies have a rating system that they use to determine what different drivers’ premiums will look like. This system is approved and regulated by state insurance departments, and so premiums are not negotiable.
However, you can control your rate by comparing prices from different insurance companies or by minimizing your risk so insurance companies feel more comfortable assigning you a lower premium.
8) Car insurance quotes are exactly what you will pay
While quotes can get pretty close, they are not the exact amount you will pay for auto insurance. Quotes serve as an estimate of what you can expect to pay based on the information you provide to a carrier. It is not the same as your rate, which is the exact amount that you will pay for car insurance. Once you decide to buy from a certain company, they will write you a policy and give you your final premium price.
9) A no-fault accident will never impact your rates
Unfortunately, any time you submit a claim to your insurance company there is a chance that your premium will increase, even if you are not the one at fault. However, if the at-fault drivers’ coverage takes care of everything and you do not need to submit a claim to your insurance company, your rates should not be affected.
10) Car insurance covers any item stolen from your car or damaged in an accident
More often than not, car insurance does not cover theft or damage of personal belongings. The best way to protect your valuable belongings is by adding them to your home or renters insurance policy.
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