Very few people fully understand insurance, which causes a lot of misinformation and myths to arise. This article will address a few common myths about auto insurance.
Myth #1: Red cars cost more to insure.
Truth: Red, yellow, and other ‘racing’ colors make insurance rates higher just as much as flame vinyls make a minivan go faster. The color of your vehicle has absolutely no bearing on your insurance rates and is not taken into consideration for any part of the rating process. These bright colors may show a glimpse into the owner’s personality, but the insurance companies only rate on facts.
Myth #2: If you let someone borrow your car and they cause an accident, then their policy will pay for it.
Truth: Auto insurance policies follow the car, so if you let someone borrow your car, the damages are going to be on your record. Furthermore, be careful of cut-rate insurers, as they will sometimes sneak in provisions that limit coverage when someone other than you drives the car!
Myth #3: After an accident, you can use your Comp/Collision insurance to get all new parts for your car.
Truth: While the parts will be technically ‘new’ to you, salvage or aftermarket parts might be used to repair your car. Many bottom-dollar auto insurers can offer those low prices because they’ll be using depreciated parts to fix your car. The reason aftermarket parts are cheaper is because they’re made from old molds used by the original manufacturer. Being made from old molds, those parts might not work as well and might not fit correctly. Additionally, they might be made with lesser quality materials than the the original manufacturer’s parts.
Myth #4: After an accident, your insurance will pick up all of the costs of going to court.
Truth: Again, if you have a cut-rate insurer, they might be covering you for damages you cause, but they might not be paying for your court fees or the cost of your lawyer! Many auto insurers limit or exclude legal defense payments from their coverage, only picking up the final judgment. Additionally, they might not reimburse you for your time you spend in court.
Myth #5: All auto insurance is the same.
Truth: Not all insurance was made equally! There are some great auto insurers that have created robust coverages, but you’re going to have a pay a little bit extra for those peripheral coverages. So think about it—if an insurer can sneak these provisions into your auto policy, what about even larger policies like your Homeowner’s policy? What about your business’ insurance? Insurance is not a commodity, and it requires careful review from an honest professional!