Courtesy of iii.org
When purchasing car insurance, it is important to understand the factors that affect your insurance costs and coverage. Unfortunately, there is very bad information that passes for "common wisdom" – here we distinguish the myth from the facts about car insurance.
Myth 1 – Color determines the price of car insurance
It does not matter if your car is "Arrest Me Red" or "Hide In Plain Sight White" – the color does not actually affect your car insurance costs. The price of your car policy is based on many factors, such as car make, model, body, engine size and vehicle age, as well as the car's sticker, the cost of repairing it, its overall safety record and the likelihood of theft. Insurers also take into account age, driving record and sometimes the driver's credit history.
Myth 2 ̵
On the contrary, in fact – older drivers may be eligible for special discounts. For example, those over the age of 55 can get a reduction in their car insurance premiums if they successfully complete an accident prevention course (available through local and state authorities as well as through AAA and AARP). Retirees or people who are not full-time employees – and therefore drive less – can also get a discount on car insurance. Older driver programs and discounts vary depending on state and insurance company and driver age, so if you think you may qualify, contact your insurer.
Myth 3 – Your credit has no effect on your insurance rate
Your credit-based insurance score – derived from your credit history – may be significant. A good credit score shows how well you handle your financial business and has proven to be a good predictor of whether someone is more likely to file an insurance claim as many insurance companies take it into consideration when you want to buy, change or renew your car insurance. People with good credit – and thus good insurance results – often stop paying less for insurance.
Myth 4 – Your insurance covers you if your car is stolen, vandalized or damaged by falling tree legs, hail, flood or fire
This only applies if you choose comprehensive and collision coverage along with your standard policy. If a car is worth less than $ 1,000 or less than ten times the insurance premium, it may not be cost-effective to buy these covers – but you must have a collision and total insurance policy to fully protect your vehicle from all types of damage. . Myth 5 – You only need the minimum amount of car liability insurance required by law
Almost all states require you to buy a minimum amount of car liability insurance but just buying the minimum liability means you are likely to pay more for their losses after an accident – and these costs can be steep. The insurance industry and consumer groups generally recommend at least $ 100,000 in personal injury protection per person and $ 300,000 per accident. If you have significant personal financial assets to protect in the event of a lawsuit, you may even want to consider an umbrella liability policy.
Myth 6 – If another person drives your car in the event of an accident, his or her car insurance will cover the damage
In most states, car insurance that covers the vehicle is considered the primary insurance. This means that the car owner's insurance company must pay for damages caused by an accident, regardless of who is driving. Policies and laws differ by state, so make sure you understand the rules before allowing another person to drive your car.
Myth 7 – Soldiers pay more for insurance than civilians
If you are in the military – no matter what branch —You actually get a discount on car insurance. You will need to provide documentation showing your name, rank and the time you will be employed in the service (in some situations you may have your commander call for you.) Shop around – some car insurance companies offer discounts for former military members and their families.
Myth 8 – Personal car insurance also covers business use of your car
If you are self-employed and use your vehicle for business purposes, personal car insurance may not protect you, so it is important that you buy company car insurance. If you have other people – such as employees – using your vehicle, check their driving records regularly. Catalog