Car Insurance Myths - How to Get to the Facts
There are many myths about car insurance.
Believing some of these myths can cause you some inconvenience.
Believing others can cost you plenty.
Do red cars cost more to insure? Most insurers don't even ask what color the car is, so color is not a factor.
Car insurers do rate cars based upon make, model, year, engine size and body type.
Why is my friend's car insurance cheaper than mine? Insurance rates are determined based upon both the vehicles and the drivers on the policy.
Factors may include driving record, age, marital status, and even credit rating.
Which is better, a low deductible or a high deductible? Many people believe a low deductible will make it easier to get damage repaired without a large out-of-pocket expense, but you will pay significantly higher premiums for a low deductible.
It makes more sense to opt for a higher deductible and bank the premium difference to cover the deductible in the event of an accident.
Doesn't full coverage mean everything is covered in full? In a word, no.
For example, if you owe more than your car is worth and it's totally destroyed, your insurer will only pay what the car is worth.
You may still end up owing the difference to the bank.
If your car is an older model, it may not be worth paying the premium for full coverage.
Full coverage may not pay for things like hail damage or theft of parts.
(Your car insurer will say that theft coverage only covers the whole car; call your home insurer.
Your home insurer will say its not covered because it's part of the car.
) Your full coverage may not pay for fire or theft.
Many people assume that full coverage will also pay for a rental car while yours is being repaired.
While you can get coverage to provide a rental car, you usually have to pay for that option separately.
What kind of cars do thieves prefer? Many people assume that thieves prefer new luxury cars.
However, most thieves prefer stealing older cars.
There are several reasons for this.
Newer luxury cars may be more likely to be equipped with anti-theft or tracking devices.
There is a larger market for parts for older, more common cars; and older cars are more easily stolen.
Be sure that you know the terms and conditions of your insurance policy, especially coverage limits and claims procedures.
If you don't understand something, ask.
Be sure you understand what you're getting, and get what you're paying for.
Believing some of these myths can cause you some inconvenience.
Believing others can cost you plenty.
Do red cars cost more to insure? Most insurers don't even ask what color the car is, so color is not a factor.
Car insurers do rate cars based upon make, model, year, engine size and body type.
Why is my friend's car insurance cheaper than mine? Insurance rates are determined based upon both the vehicles and the drivers on the policy.
Factors may include driving record, age, marital status, and even credit rating.
Which is better, a low deductible or a high deductible? Many people believe a low deductible will make it easier to get damage repaired without a large out-of-pocket expense, but you will pay significantly higher premiums for a low deductible.
It makes more sense to opt for a higher deductible and bank the premium difference to cover the deductible in the event of an accident.
Doesn't full coverage mean everything is covered in full? In a word, no.
For example, if you owe more than your car is worth and it's totally destroyed, your insurer will only pay what the car is worth.
You may still end up owing the difference to the bank.
If your car is an older model, it may not be worth paying the premium for full coverage.
Full coverage may not pay for things like hail damage or theft of parts.
(Your car insurer will say that theft coverage only covers the whole car; call your home insurer.
Your home insurer will say its not covered because it's part of the car.
) Your full coverage may not pay for fire or theft.
Many people assume that full coverage will also pay for a rental car while yours is being repaired.
While you can get coverage to provide a rental car, you usually have to pay for that option separately.
What kind of cars do thieves prefer? Many people assume that thieves prefer new luxury cars.
However, most thieves prefer stealing older cars.
There are several reasons for this.
Newer luxury cars may be more likely to be equipped with anti-theft or tracking devices.
There is a larger market for parts for older, more common cars; and older cars are more easily stolen.
Be sure that you know the terms and conditions of your insurance policy, especially coverage limits and claims procedures.
If you don't understand something, ask.
Be sure you understand what you're getting, and get what you're paying for.
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