Some common misconceptions about car insurance can cause you to buy the wrong kind of coverage. If you rely on advice from your friends and family who are not car insurance experts, you may be surprised when you attempt to file a claim after an accident. These assumptions can be more expensive in the long run, so it is important to understand the real facts.
1. Car Color Impacts Insurance Rate
Many people believe that a red car is more expensive to insure. The truth is that car color doesn’t factor into your car insurance rates at all. Insurance companies determine their rates based on the safety of the car and your personal information. Don’t assume a high rate quote is because of your car color. Get another quote and compare.
2. Insurance Companies Can Cancel Policies without Notice
If you make your regular payments on time and maintain a valid driver’s license, your car insurance company cannot revoke your insurance without notice. State regulations require insurance companies go through a specific process before dropping anyone’s coverage, which includes notifying you in advance.
3. A Traffic Ticket Means Outrageous Insurance Rates
Not all traffic tickets are the same. If a speeding ticket is only a few miles per hour over the limit, it will have a smaller impact than one for 10 or 15 miles per hour over the limit. If it is your first traffic ticket, you may not notice any change in your insurance rates at all.
4. Expensive Cars Make Insurance More Expensive
Insurance companies base rates on the cost history of the make and model of car you drive. The sales price isn’t really what sets the rate determination. Insurance companies will look at how often owners of that specific type of car have filed claims and the base your rate on that information. While the cost to repair or replace influences rates, frequency of claims has a much stronger bearing on rates.
5. Personal and Business Uses are covered by the Same Policy
A car that is transporting business material or used for business in any way must have a business policy. Your personal insurance coverage will not apply if you use the car for work. You should also take care not to accept money from carpoolers when you commute to work, or your insurance company could call the rides business use.
6. Old Cars Don’t Need Comprehensive Coverage
You may think that your older car doesn’t need comprehensive coverage because it is less likely to be stolen. The truth is, thieves prefer to steal older cars so that they can strip them and sell the parts. A brand new car is a less desirable target because there are fewer of them on the road and the resale value of parts is lower.
7. The Person Driving the Car is Responsible for Damages
If you lend your car to a friend and the friend is involved in an accident, your insurance coverage will be responsible for covering any damage. The insurance is linked to the car, not the driver. Your friend’s insurance policy will only come into play if the damage to the cars exceeds your personal insurance policy maximum.
Jessica Bosari writes for carinsuranequotescomparison.com, a site that keeps consumers up to date on important insurance matters. A consumer in the know is more likely to make a smart decision in an auto insurance quotes comparison.
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