8 auto insurance myths

Know the facts to get the most out of your auto insurance budget.It is critical to understand the elements that influence your insurance prices and coverage when selecting a vehicle policy. Unfortunately, much incorrect information masquerades as “common wisdom”—here, we distinguish fiction from truth concerning vehicle insurance.

Myth 1: The price of vehicle insurance is determined by color.

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It makes no difference if your automobile is “Arrest Me Red” or “Hide In Plain Sight White”—the color has no bearing on your auto insurance premiums. The cost of your auto insurance is determined by a variety of criteria, including the car’s make, model, body style, engine size, and age, as well as the car’s sticker price, the cost of repairs, its general safety record, and the chance of theft. Insurers also consider the driver’s age, driving record, and, in some cases, credit history.

Myth 2: As you become older, your auto insurance costs more.

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On the contrary, elderly drivers may be eligible for special reductions. Those over the age of 55, for example, can earn a discount on their vehicle insurance rate if they successfully complete an accident prevention course (offered through local and state authorities, as well as the AAA and AARP). Retirees and individuals who are not employed full-time and hence drive less may also be eligible for a vehicle insurance discount. Older driver programs and discounts vary by state, insurance company, and driver age, so check with your insurance expert if you believe you could qualify.

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Myth 3: Your credit score has no bearing on your insurance rate.

Your credit-based insurance score, which is based on your credit history, may be important. A good credit score shows how well you manage your finances and has been shown to be a good predictor of whether someone is more likely to file an insurance claim, so many insurance companies consider it when you want to buy, change, or renew your auto insurance coverage. People with high credit, and hence good insurance ratings, frequently pay less for insurance.

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Myth 4: If your automobile is stolen, vandalized, or damaged by falling tree branches, hail, water, or fire, your insurance will cover you.

This is true only if you add comprehensive and collision coverage to your base insurance. If your automobile is worth less than $1,000, or less than ten times the insurance rate, obtaining these coverages may not be financially effective—however, collision and comprehensive insurance are required to completely protect your vehicle from all forms of damage.

Myth 5: You simply require the bare minimum of motor liability insurance mandated by law.

Almost every state requires you to get a certain level of car liability coverage, but doing so means you will likely pay more out of pocket for damages sustained after an accident—and those expenses may be significant. In general, the insurance industry and consumer groups suggest a minimum of $100,000 in bodily injury coverage per person and $300,000 per accident. If you have significant personal financial assets to safeguard in the case of a lawsuit, you should consider purchasing an umbrella liability insurance.

Myth 6: If someone else drives your car, his or her auto insurance will cover the damages in the event of an accident.

In most jurisdictions, the main insurance is the auto insurance policy that covers the vehicle. This implies that regardless of who is driving, the automobile owner’s insurance company must pay for any damages caused by an accident. Policies and legislation fluctuate from state to state, so be sure you understand the requirements before letting someone else drive your automobile.

Myth 7: number sven is that soldiers pay more for insurance than civilians.

If you are a member of the military, regardless of branch, you are eligible for a discount on vehicle insurance. You’ll need to provide documentation that includes your name, rank, and the day you’ll be enlisted (in some cases, your commanding officer may be allowed to make a phone call on your behalf). Shop around—some vehicle insurance companies provide discounts to retired military personnel and their families.

Myth 8: Personal auto insurance covers commercial usage of your vehicle.

Personal auto insurance may not cover you if you are self-employed and use your vehicle for professional reasons, thus it is critical to buy business vehicle insurance. If you allow others to use your car, such as staff, check their driving records on a regular basis.

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