There is a lot riding on your vehicle. You have invested thousands of dollars on a new or used car and, more importantly, you are transporting your friends and family around in it. Taking these things into account along with the consideration that you could be held accountable for the lives and property of others should you cause an accident, means that you should be informed with regards to your auto insurance policy and its coverage. Despite the importance of auto insurance, many people operate under some common misconceptions when it comes to their auto insurance policies.
Here are 5 common auto insurance myths debunked.
1) Auto Insurance Coverage Follows the Driver
Car insurance is tied to the vehicle, not the driver. When you purchase auto insurance, your coverage, rate and liability are based on you as a drive and the vehicle you are insuring. Both you and the car make up the insurance and the insurance is tied to the vehicle, so if you let someone else drive your car, you are essentially lending them your policy as well. Similarly, if you drive someone else’s car, you are driving under their insurance (or lack thereof).
2) A Lapse in Coverage Won’t Affect Your Rate
You may have a good reason, but going without car insurance for as little as a day can put you in the high-risk category from an insurer’s perspective. Lifestyle changes may dictate that you don’t need to drive for an extended period of time but the insurance companies don’t know for sure that you are not driving while uninsured. Driving without at least the minimum amount of insurance is illegal in 49 states.
3) New Cars Cost More to Insure
This isn’t always the case. The make and model of the vehicle have far more to do with the cost of insurance than the year the car was made. An older sport utility vehicle (SUV) or sports car is going to be more expensive to insure than a brand new mid-size family sedan. It actually makes sense when you think about it. SUV’s can cause more damage to another vehicle, so they represent a greater liability risk; whereas sports cars can go faster than a traditional car and often offer less safety features.
4) Bad Credit Won’t Affect Your Auto Insurance Rates
Most insurance companies use credit score to help them categorize drivers and determine risk. Insurance companies point to statistical analysis that correlates a higher credit scores with fewer accidents. If that holds true then people with good credit cost insurance companies less than those with poor credit. This practice has been banned in Hawaii, California and Massachusetts but is common practice in other states.
5) If You File a Claim, Your Rates Will Go Up
Car insurance companies take many factors into account before raising a policy holder’s rates and, as we’ve seen, credit score could be one of them. However, the simple fact that you filed a claim will not automatically raise your rate. Insurer’s take into account your driving history, who caused the accident, the severity of the accident, and your policy itself.
Hopefully you are now a more well-informed auto insurance policy holder and you are in a better position to understand your coverage, your liability and how to manage your policy more effectively.
This article was written by Christina Hensley, who is the primary writer for shop-autoinsurance.com, which specializes in auto insurance rates and quotes.