Fact vs. fiction: A few common auto insurance myths dispelled
21st Century Insurance realizes there are numerous auto insurance myths that exist out there. These mistaken assumptions often lead consumers to make uneducated decisions, like purchasing the wrong type of policy, not getting enough coverage - or worse yet - not purchasing the car you really want.
So how do you know what to believe? Here are a few common insurance myths that will help you tell fact from fiction.
Myth #1: The color of my car helps determine the price of my insurance (by far the most common auto insurance myth).
Many people feel that the color of their car - especially red - will help determine the price of the premium. However, factors that matter most when determining the price of your policy are: year, make, model, body type, engine size and age of your car, as well as the drivers on your policy.
Myth #2: If someone else is driving my car and they get into an accident - their insurance will cover the damages.
If your friend gets into an accident while driving your car, you could be held financially responsible for any damages. In most states, the auto insurance policy that covers the vehicle - your policy - is considered to be the "primary" policy that will cover any damages caused by an accident. However, if your policy limits are too low and does not cover all the damages, there is the possibility that the driver’s insurance policy may have to pay the remainder. This is subject to your state’s insurance regulations.
Myth #3: My insurance policy will cover everything including damage from fire, vandalism and hail.
Your auto insurance policy has different types of coverage. Should you choose to include Comprehensive coverage, which is optional (but we highly recommend including it), it will pay for damages caused by an event other than a collision, such as: fire, theft, vandalism, weather (hail, floods, etc.) and collisions with animals. For more information on types of coverages, please visit the Insurance Information Resource Center at 21st.com.
Myth #4: When I receive a speeding ticket, my insurance premium goes up automatically.
Although it may happen, one ticket does not automatically mean your rate will increase. There are many factors that play into what may happen after a speeding ticket, including: How fast you were going, the nature of the infraction, your driving history and how long you’ve been insured with your company.
Myth #5: I only need the bare minimum insurance coverage for my car.
The minimum requirement in most states is for your car to have liability coverage with the minimal amount of coverage. However, that amount of coverage may not cover all the damage costs that you caused in an accident. If it doesn’t, and you are involved in a lawsuit, your assets may be pursued.
Myth #6: New, more expensive cars more likely to be stolen.
Actually, it may be the other way around. Older cars are more likely to be stolen than newer ones. The fact is that thieves find older cars much easier to steal. According to the National Insurance Crime Bureau, the top 10 most stolen vehicles in 2009 were: 1994 Honda Accord; 1995 Honda Civic; 1991 Toyota Camry; 1997 Ford F-150 Pickup; 2004 Dodge Ram Pickup; 2000 Dodge Caravan; 1994 Chevrolet Pickup (full size); 1994 Acura Integra; 2002 Ford Explorer; and the 2009 Toyota Corolla.
Sources: Insurance Information Institute (III); Insurance.com; Financialhighway.com; National Insurance Crime Bureau (NICB)