11 Car Insurance Myths Debunked: Know the truth

By Randy Luton | Last Updated: 08/31/2022

Key Insights:

  • There are many car insurance myths that drivers believe religiously.
  • Do you know? Some of these auto insurance common myths can lead to buying the wrong policy or paying more than required.
  • It is important to have practical knowledge of the reliability of these myths and misconceptions.

Car insurance is a necessity, we all agree on that right? And we all keep looking for ways to reduce our premiums somehow. As a result, some of us do intense research on the internet about auto insurance rates, discounts, and ways to get cheaper rates.

In this research sometimes we see some myths and we start believing them and plan our policies according to these myths. On the other hand; there are some myths that we might have heard from a friend or family member and we believe in them. Sometimes these auto insurance common myths and misconceptions can lead to buying the wrong car insurance policy or an expensive car insurance policy.

To save you from these situations RateForce has created a list of all the top car insurance myths and facts that most the drivers believe:

Common Myths About Car Insurance

  1. Auto insurance costs increase with age.
  2. The state minimum amount of auto insurance is sufficient.
  3. Advanced safety features can reduce your insurance premium by a huge amount.
  4. Your credit score has no relation to your auto insurance.
  5. Your personal auto insurance will cover the business use of your car.
  6. No-fault auto insurance means it’s not the fault of the driver.
  7. The insurance cost of red cars is more.
  8. If someone else is driving your vehicle then the damages will be covered by their insurance not yours.
  9. If you have a rental car coverage that means you’re protected in rental cars.
  10. Your auto insurance company can drop you off at any time.
  11. If my personal items are stolen from my car then I can file a claim with my auto insurance company.

1. Auto Insurance Costs Increase With Age

The reality is actually the opposite of this myth. With time your car insurance rate will decrease till you are 65. According to most car insurance companies; 17 years old drivers are less safe and are more prone to accidents as a result they file more claims.

While on the other hand drivers above 25 years are more responsible and they get into fewer accidents as compared to young drivers. And with time the chances of getting into an accident keep on decreasing which leads to fewer claims.

After 65 years of age, there are chances that your insurance rate might increase a bit but that can be balanced with discounts like senior driver discounts.

2. The State Minimum Amount of Auto Insurance is Sufficient

The state minimum auto insurance is sufficient to drive a car in that particular state territory. But it is not sufficient to rely on in case of an accident. If you ever get into an accident or your vehicle gets damaged due to any natural or man-made disaster then you will have to bear the cost of all the repair and hospital bills.

Accidents have become common nowadays; every year we witness approx 32,000 fatal road accidents in our country. Small accidents with minor car damages and injuries can lead to an average expense of $2000. And in these expensive times, we all know how much a $2000 bill can affect our savings and budget. As a result, we can not rely on only state minimum to survive and it is nothing but one of the other auto insurance myths.

3. Advanced Safety Features Can Reduce Your Insurance Premium By A Huge Amount

This is partially true and partially false. Modern safety features have a big impact on the insurance cost but not much. These features increase the safety of the drivers and the passengers. But the impact of advanced safety features on the chances of getting into an accident is low.

These safety features will not and can not save you from getting into an accident. As a result; your chances of filling a claim stay the same most of the time. That is why most car insurance companies do not provide huge discounts for cars with high-tech safety features.

Most drivers believe in this myth and they spend a lot of money to add extra safety features to their cars with the hope to get cheaper insurance rates. But in reality, insurers don’t give much importance to these safety features.

4. Your Credit Score Has No Relation To Your Auto Insurance

Your credit score actually plays a very important role in deciding the cost of your car insurance policy. The credit score defines if a driver is reliable or not and based on that the company analyses if the driver will pay the premium on time or not.

Yes, most state governments have banned companies from using the credit score as a factor in calculating insurance costs. But still, the companies use this information indirectly. The positive side of this is; that the driver can work on the improvement of credit score by paying the bills on time.

5. Your Personal Auto Insurance Will Cover The Business Use of Your Car

Are you an entrepreneur or business owner? Do you use your personal car to do your office chores? Well, that is not allowed by most car insurance companies. If you are using your car for your business use and you get into an accident then you can not apply for an insurance claim. You will have to buy commercial auto insurance for that purpose. Even if it is as small as meeting a client for coffee you will have to use your commercial vehicle for that.

6. No-Fault Auto Insurance Means It’s Not The Fault of The Driver

Another major myth or misconception among most drivers is; that eligibility for no-fault insurance means they can not be blamed for the accident. No-fault car insurance means the driver is stuck in a state where their insurer is required to take care of the medical expenses and the lost wages in case of an accident.

No-fault auto insurance covers only the medical bills of the driver or sometimes the passengers. It will not cover any kind of property damage no matter who was at fault in the accident. It will also not cover the repair expenses of any property in case the other person does not have any insurance. In that case, you can try to get uninsured motorist car insurance. It will cover all the expenses to repair your car.

7. The Insurance Cost of Red Cars is More

There is no connection between the color of the car and the cost of car insurance. This is one of the most popular rumors that has been floating around for a while now. People believe that red cars are considered more accident-prone hence they get higher insurance rates.

The reality is; that your insurance company will not consider the color of the car to calculate the cost of your policy. You can buy a red, black, blue, yellow, even pink car; your insurance cost will not increase because of the color.

8. If Someone Else is Driving Your Vehicle Then Damages Will Be Covered By Their Insurance Not Yours

One of the common ​​myths about car insurance is; Car insurance follows the driver, not the car. This is completely false and the reality is just the opposite. If someone else is driving your car and that car gets into an accident then you will have to file a claim, not that driver. That driver’s auto insurance will follow his or her car, not yours.

So if you are planning to let your friend drive the car and he or she wrecks your car due to any reason then you will have to inform your insurance company about it.

9. If You Have A Rental Car Coverage That Means You’re Protected in Rental Cars

This is one of the biggest auto insurance myths among almost all drivers around the country. People think that rental car coverage means they can claim insurance in case they get into an accident in a rental car.

But this is entirely false. Rental car coverage means; if you get into an accident and your car is in repair then you can rent a car and your insurance company will pay for the charges. Till the time your car is all ready for use again, you can rent a car without any stress of paying a huge amount for that time period.

Sometimes the cost of renting a car increases around the festivals or peak seasons. At that time paying for rentals from your own pocket can be unaffordable.

10. Your Auto Insurance Company Can Drop You Off At Any Time

Most of the drivers are scared that their car insurance company might drop them and then they will have to find another after an accident or ticket. But this is completely false. Every state now has a law that no company can drop any driver prior to the contract ending date.

The only exception is; if the driver was involved in fraud or failure to pay the premium on time. Then only the auto insurance companies are allowed to drop the car insurance of a driver otherwise the company is bound by laws to stay on its commitment. But this is only till your contract ends; once your contract is over then there are no limitations on the company.

11. If My Personal Items Are Stolen From My Car Then I Can File A Claim With My Auto Insurance Company

We all have either witnessed or heard about losing a laptop, phone, or bag from a car. It can happen to anyone. But you can not rely on your car insurance company for a replacement of your personal items that got missing from your insured car.

Insurance for things like laptops, purses, bags, mobile phones, and iPad comes under homeowners’ or renters’ insurance policies. If you have one then you can try filing a claim from your homeowner’s insurance company. But in any case, your car insurance company is not responsible for the items stolen from your car.

Over To You

Now that you know the truth behind most of the commonly believed car insurance myths and facts. We are sure you will make a better decision to buy or upgrade your policy next time. Looking for affordable car insurance rates in your city? Rateforce is here to help with the cheapest car insurance rates based on your profile.

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Sources

  • Read an article on Forbes about how age affects the car insurance rates in our country on 19 April 2022.
  • Referred to the IIHS website to check the number of road accidents in our country on 19 April 2022.

Editorial Guidelines: The above is meant as general information to help you understand the different aspects of auto insurance. This information does not refer to any specific auto insurance policy. Coverages and other features vary between insurers, vary by state, and are not available in all states. References to costs of coverages/repair, average or typical premiums, amounts of losses, deductibles, etc., are indicative and may not apply to your situation. We encourage you to speak to our insurance representative and to read your policy contract to fully understand your coverages.

Randy Luton is the Founder and CEO of RateForce. He is passionate about InsurTech services and has in-depth knowledge about the auto insurance sector of the USA.