“One must not be hampered by yesterday’s myth in concentrating on today’s needs”. Will you believe it, if I say that your car is of red color so it will cost you high to insure it or if I say more insurance premium means more coverage? Sounds unbelievable and stupid, doesn’t it? Don’t you think it is difficult to separate the myth from the important truth? Yes, because for no reason myth takes you far away from a great deal of security. Here, we are discussing car insurance myths.
At the time of buying auto insurance, you check many factors before purchasing the plan. During this process, you also come across a lot of advice from different sources which are mostly unreliable. And you get confused between myth and fact. However, myths around insurance are so common and they always affect your decision in choosing the best policy.
Let’s bust the common car insurance myths and help you in choosing the best your car deserves.
8 Car Insurance Myths You Must Know About!
#Myth1: Premium of auto insurance depends on the color of your car!
This myth is quite popular that premium is high for red cars. Like Seriously? This means choosing your favorite color will cost you more. In history and till today insurance companies never determine the price of car insurance on the color of your car. Neither it is there in any law.
There are strict criteria or factors under which insurance companies decide the price of premiums to be paid by you. Factors like car model, body type, engine size, fuel type, age, credit score, repair cost, Insured declared value (IDV), etc.
#Myth-2: Your friend will pay if he has caused damage to your car!
Incorrect. The fact is car insurance is for the car not for the driver. So irrespective of whoever is driving, the insurance company will pay for the damages. So, when you are giving your car to your friend that clearly means that insurance is attached to it.
#Myth-3: Price negotiation can be done with insurance companies!
This is entirely false. The price of your decided policy plan which you are purchasing is fixed by the insurance company. There is no negotiation. The insurance companies are regulated by the government so the price of the policy plan must comply with government guidelines. You can get discounts on premiums but that too occasionally.
#Myth-4: Any type of damage is covered by car insurance.
This is not the entire truth. The fact is it all depends on what type of coverage you have purchased from the insurance company. If you want full coverage for your car which will cover any type of damage, then you need to purchase collision and comprehensive coverage. These are optional coverages that don’t add up in these policies.
#Myth-5: Less car coverage will save a lot of money.
This approach of saving money is totally going in the wrong direction. If you purchase less coverage then only your insurance premium would be less. However, this will increase your expenses for car damage.
For instance, you accidentally hit the other car on the road, and you don’t have property damage coverage then you being financially responsible have to pay from your pocket. Hence, you have not saved the money but you didn’t take the right coverage for your car. So it’s better to pay a little more today to save a lot more tomorrow.
#Myth-6: Zero effect of the credit score on the insurance rate.
This is absolutely false. Your credit history or score has a huge effect on the policy you purchase. A credit score is a tool for the insurance companies by which they predict the probability of you filing a claim, file inflated claim, or committing insurance fraud. So, always remember your credit score tells a lot about your future action at present. Be cautious.
#Myth-7: No difference between collision and comprehensive insurance!
Be aware of this myth. These two types of car insurance have different coverage. Collision gives coverage when your car hits another car or any other object, irrespective of whose fault. Whereas, comprehensive gives coverage when your car is damage due to fire, natural calamity, vandalism, theft, etc.
#Myth-8: The Car used for a business purpose is covered under personal auto insurance!
Not true. How? For instance, you are an employee of XYZ Courier Company and you have no coverage given by XYZ Company. While delivering a courier, you met with an accident then your personal insurance plan is not liable to pay any claims for damage due to accident.
Therefore, when being self-employed and driving a car for business purposes then you are at your own risk. In this case, you are not at all protected under personal auto insurance. For this purpose, you need commercial auto insurance.
Half or little knowledge is always dangerous than no knowledge. Who spread myths or wrong information? You will agree if I say that people who are spreading it have little knowledge or zero-knowledge. With this little knowledge, people tend to react immediately by spreading myths without confirming it. This is where the seed of myth grows and spreads like a virus among the public. There are many misconceptions spreading about car insurance coverage and pricing.
You know the need for car insurance when you own a car. But what is more important is to understand the policy and choose which can give your car the best coverage. One more thing which is important for you to understand is the main factors to determine the insurance cost. You can easily understand this when you avoid the above-described myths. Just be sure that you have clear facts before purchasing car insurance. Some reliable car insurance companies are State Farm, Geico, etc.
This is a bitter truth that insurance is a bit complicated but let’s not make it more complicated by believing in myths. In your financial planning, there is no place for any myth for you and your family’s safety. Always remember whenever you take a decision in choosing a policy you need to make sure that you have full proof facts and strong advice.
We hope this article has given you all the information on Car Insurance Myths which you were searching for. Do share your reviews on this article in the comment section below.