Car insurance policies offer a good way to protect yourself financially in case of accidents. If you are planning to own a car, you may have come across certain widespread ideas regarding vehicle insurance companies, some of which are true while others are not.
Whether you are buying car insurance for the first time or not, understanding car insurance policies and how they work can help you spot the difference between what is true and what is not and, in turn, make the most out of your policy.
Here are some car insurance misconceptions you should know.
1. Car Insurance Companies Can Charge Whatever They Want
Most people think that insurance companies can charge whatever they want. But that is not true; each state has an insurance regulatory body that administers insurance companies operating in that region.
They keep tabs on the information that insurance firms gather and their premiums to ensure they do not overcharge their clients.
However, you should note that all car insurance companies do not charge the same. Some charge high premiums while others offer promotional discounts as per terms & conditions.
That is why you should compare different car insurance companies in your state to find the cheapest insurance deals for your car.
2. The Color Of Your Car Determines Auto Insurance Premiums
It is a widely held belief that the color of your automobile will affect how much you pay for auto insurance. For example, most people believe red cars are associated with higher insurance premiums.
However, car insurance companies consider factors like the car’s make, body style, model, engine size, and age, but not by its color when calculating premiums. In addition, the driver’s age, credit history, and driving record can influence the cost of your car insurance.
Other factors like the cost of your automobile’s repairs, its safety record, and its anti-theft measures also affect the cost of your car insurance coverage.
3. The Legally Required Minimum Liability Vehicle Insurance Coverage Is Enough
While almost all states now require drivers to carry vehicle insurance, most people believe that minimum motor insurance required by law is all you need.
But the truth is that when the cost of accidents rises, so does the amount of liability insurance you need. In most cases, those who have only the minimum motor liability insurance end up paying out of their pocket in the event of an accident. Therefore, it is important to have add-ons to your minimum insurance coverage like liability insurance, third-party insurance, and so on.
4. Car Insurance Follows the Driver
Many people think that their automobile insurance company is not responsible if another person causes an accident while driving their insured vehicle. But that is not the case.
The insurance follows the car and not the driver. That means if you lend your friend your car and get involved in an accident, your auto insurance will pay for the damages your vehicle sustains due to that crash.
That is why you should never allow anybody to operate your vehicle unless you know their driving record. Also, even if you have insurance on one vehicle, you will not be protected if you drive another car. Having add-ons like liability insurance is always a good idea.
5. Insurance Premiums For Brand-New Vehicles Are Usually Higher
Most people think insuring a new car is more expensive than insuring an old car. However, the truth is you may be able to save money on your vehicle insurance if you are driving a new car.
The premiums are lower for insuring newer automobiles because they are equipped with several basic safety features such as side airbags and antilock brakes.
Repairing older automobiles may be expensive since outdated automobile components become more challenging to obtain. As a result, the cost of repairs and insurance premiums go up.
