Top 10 Car Insurance Myths Debunked

Last updated September 6, 2024

Picture of Written by <a href="https://rateretriever.com/about/katie-dee/"><span style="text-decoration: underline;">Katie Dee</span></a>

Written by Katie Dee

Picture of Edited by <a href="https://rateretriever.com/about/alyssa-dicrasto/"><span style="text-decoration: underline;">Alyssa DiCrasto</span></a>

Edited by Alyssa DiCrasto

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.

Frequently asked

What factors affect your car insurance rates?

There are dozens of factors that affect car insurance rates. Some of the most notable factors are your location, age, gender, credit score, driving record, claim history, vehicle type, coverage limits, coverage types, and deductible. Additionally, the car insurance company you select can affect your car insurance premium.

Does your lifestyle affect your car insurance?

There are several lifestyle-related factors that can impact the cost of your auto insurance policy. For example, if you have a long commute to work or take road trips frequently, you might pay more for car insurance than someone who drives less often. Similarly, if you live in a city or urban area, your rate might be higher than someone who lives in a rural area. However, factors like your job, hobbies, or health don’t have any impact on your car insurance.

How does where you live influence the cost of auto insurance?

Where you live has a significant impact on the cost of your car insurance policy. Insurance companies look at things like the severe weather risks in your area, the rate of vehicle thefts in your neighborhood, the number of uninsured drivers in your location, and the cost of car repairs and labor. If you live in an area with few risks, you will probably pay less for car insurance.

About Rate Retriever

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So we took everything we hated about comparing insurance quotes online – the spam, the long questionnaires, the limited choices, the inaccuracy of quote prices – and threw it out the window, favoring a short form that more accurately estimates what you’ll pay at each of the top insurance providers near you.

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