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Friday, September 20, 2013

Don’t believe these car insurance myths!

By Samantha B. Rivers
How well do you really understand how car insurance works? If you’re the average person, you probably don’t know it all that well. But take comfort in that even if you don’t know a deductible from a down payment, you’re not alone.

There also are lots of myths that make buying car insurance even harder. You’ve probably heard friends or family talk about how the color of your car can drive up the cost of your insurance, but keep reading to find out why you shouldn’t believe them.
  • Myth #1: A new car is automatically covered under my current auto insurance policy.

Truth: No way! If you want to add a new care to your existing policy, you’ll have a certain amount of time (usually 30 days) after buying the car to contact your insurance company and add it to your policy. If you don’t take this important step, your new car is uninsured on the road.
  • Myth #2: Red cars costs more to insure than other colors.

Truth: This is a common myth that is 100% false. Unlike the cost, make, model and year of your new vehicle, the color of the car has no affect on your insurance rates. Your auto insurance company is more concerned with your driving history, where you drive and even your credit history than what color your car is. So if you really like red, go ahead.
  • Myth #3: As I get older, my car insurance premiums will increase.

Truth: In reality, it’s usually the opposite. Drivers who are retired or only working part-time may be able to get discounts on their car insurance because they are driving less. Drivers over age 55 or older who complete an accident-prevention course offered by their insurance company to help refresh their driving skills may qualify for additional discounts.
  • Myth #4: Any damage to my car is covered by my insurance.

Truth: Nope, it’s not that easy. To put it simply, there are different types of car insurance coverage for different kinds of protection. You have to choose what type or types you want to purchase (your state may have its own requirements so be sure to check). While liability insurance covers you if you cause an accident that causes injury to people or property, it won’t help you for damage to your vehicle. On the other hand, collision coverage pays for damages to your own vehicle after an accident. Comprehensive coverage covers you for things like vandalism, damage from flooding or fire and vehicle theft.
  • Myth #5: If you file an insurance claim, your premiums will automatically increase.

Truth: This one is a bit harder to say whether it’s true or not. The short answer is, it depends. Most car insurance companies look at many factors before they raise your rate. Mostly, they consider the severity of the accident and your driving history. Who was to blame for the accident is another major consideration. If a tree branch falls and shatters your windshield and you file a claim for the damage, your rates likely won’t go up since the damage wasn’t your fault. But if you were speeding and caused a multi-vehicle pileup on the freeway, be prepared to pay more for insurance.

About the author: Samantha B. Rivers is a freelance writer based in Chicago who writes about automotive and insurance topics online. Follow her on Twitter @SassySammyBee.

* Image licenses: SisCiel; RGBStock royalty free

1 comment:

  1. From my experience most insurance policies charge a flat fee for making monthly payments. If you are a month ahead, you'll pay off the policy a month early and save the last month's fee. This typically ranges from $1.50 to $6.00.