Car insurance is a complicated subject, and there’s plenty that goes into getting the best deal. But finding the right policy isn’t made any easier if you get confused by the many myths and half-truths surrounding the topic. Here, Major Insurance, founder of the Safe Driver Scholarship, brings light to seven surprisingly common beliefs it’s best to ignore when on the topic of car insurance.
There’s a longstanding myth that red cars cost the most to insure. The thinking behind this is that red cars have a sportier aesthetic, which naturally makes it more noticeable, and more likely to be driven aggressively.
All this would add up to higher premiums if it were true, but the figures don’t agree. Statistics show that red cars don’t offer any higher risk, and insurance is built entirely around statistics.
The type of car you drive does matter, but it’s all about the engine size and replacement value. The color doesn’t matter at all.
Location Isn’t Too Important:
In focusing on how much a particular type of car will cost to be insured, most people underestimate the importance of location. Areas of high crime will tend to attract higher insurance premiums. But the complex world of insurance calculations can produce some surprises even if you live in a safer area.
It’s difficult to predict how your zip code will affect your premiums, and it’s not made any easier when different insurers give different weights to the location in their systems. Because of this, always compare quotes from several companies; the differences can be substantial.
No ‘At Fault’ Cover:
Many people believe you won’t be covered for repairs to your car if you’re involved in an accident that was your fault. While this may be true for the most basic bare-bones policies, nearly all full policies today cover your costs no matter who caused the accident.
The major exception to this is the accidents you caused while being under the influence of alcohol. If you were driving illegally, most policies would cover damage you caused to other people’s property, but not your own.
Possessions Left in Your Car Are Covered:
If your car is stolen, you won’t necessarily be covered for its contents. You may have a small amount of standard coverage for personal items kept in your car, but anything of value will need to be declared separately, and this will cost you more.
However, before extending your coverage, check your home insurance policy. You may find your possessions are also covered while temporarily stored in your vehicle.
Insurance Will Clear Your Loans:
If your car is totaled, your car loan won’t necessarily be wiped out as well. Standard insurance will only pay out the fair market value for your vehicle, and this won’t necessarily be enough to clear any outstanding finance.
This is a particular risk with brand-new cars, which lose around 20 percent of their value the minute they’re driven off the lot. To get around this, you can take out extra coverage called gap insurance, which will ensure your car loan is cleared in full if necessary.
Dealing Direct Gets You the Best Price:
Many people think you can get the best deal by going direct to the insurance company through one of their appointed agents. This isn’t likely to be true.
When you’re dealing with a captive agent, you have much less choice, and insurers know they can bump up their rates. You may get a discount compared to headline prices, but you’re unlikely to get as good a deal as with an independent broker or a comparison site.
Your Credit Score Doesn’t Matter:
Lastly, many people think that your credit score does not influence the quotes you’ll be offered. In many states, it’s true that an insurer can’t directly penalize a poor rating, but there are ways for insurers to work around this.
Your credit rating can be used as a general factor that’s fed into the calculations. A good score will tend to produce lower quotes than a higher one when combined with other considerations such as location and driving history.
The overall effect is the same: If you want lower quotes, do what you can to clean up your credit rating. And most importantly, make sure you always pay your insurance premiums on time. A spotty payment record will feed through into higher prices in the future.
Despite these seven myths being untrue, getting a great deal on car insurance can still be a complicated task. An independent insurance advisor can guide you through the maze and will have access to the full range of policies to ensure you find the best deal available. “It is essential that the consumer is aware of his or her needs/wants when shopping for a future insurance provider. This will allow for a clear understanding and prevent future myths and unmet expectations from spiraling out of control,” shared Major Insurance.