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In Touch With 21st - October 2013

5 Auto Insurance Myths Explained


Insurance myths answered

How well do you really know your coverage? When was the last time you reviewed your auto insurance policy? While it’s one thing to know your coverage limits, do you understand the factors that can affect your coverage? You’ve probably heard different stories concerning auto insurance, but many amount to nothing more than a myth. Here’s the truth about five questions you may have regarding auto insurance.

My car insurance rates automatically go down when I turn 25.

Statistically, younger (below 25) and older (aged 70 and above) drivers are involved in more accidents than those in other age groups. While it is generally true that rates tend to go down when a driver turns 25, this may not always be the case, depending on an individual’s history. Changes in one or more pieces of information used to calculate a rate could lead to you getting a higher, lower or your rate remaining the same when you turn 25. When determining auto insurance rates, insurers generally consider a variety of information including driver age, vehicle information, claim history and the claims experience of other customers similar to you.

When I buy a new car, my new car is automatically covered.

Most insurance companies require that you notify them or your agent within a specified number of days. Generally, you have 30 days to add the new vehicle to your policy. Otherwise, coverage may not be afforded.

The amount I pay for a vehicle determines how much I will pay for insurance.

The amount a person pays for a vehicle does not factor in to the amount of an insurance premium. What auto insurance companies do look at are how many claims they’ve paid on a particular model, and how much it might cost to repair or replace that vehicle.

If you let someone drive your car, their auto insurance will provide coverage in the event of an accident.

You can be financially responsible for an accident, even if someone else is driving your car. Car insurance follows the car, not the driver, meaning you are ultimately responsible for an accident and any damages that occur if they are caused by your vehicle.

In most states, the car insurance policy covering the vehicle is considered the primary insurance, which means that the insurance company for the vehicle must pay for damages caused by an accident. It is still possible the driver’s insurance company could be responsible for some of the damages if the primary insurance policy’s limits aren’t enough to cover all the damages. In this case the driver’s insurance may be responsible for the remainder of the damages.

My insurance premium will always increase if I’m involved in an accident, so I shouldn’t report it.

This is not the case, your rate does not always increase after an accident. Information about the accident is taken into account, along with additional information about your vehicle and driving history to determine your rate, and whether or not it would increase.

It is always better to notify your insurer of an incident, no matter how minor. If the incident is reported to the police, it becomes a matter of public record your insurance company will likely discover. Also, if another driver involved in an accident files a claim against you, your insurer will be able to better research the matter.

Auto insurance companies consider many factors before deciding to increase your rates, and your driving history ranks among the most important. So the best bet is to continue to be a safe driver.

The bottom line

Hopefully this clears up some myths you may have heard concerning auto insurance and help you understand that sometimes what you hear may differ from reality. And while people often talk about insurance costs going up, there are also many situations where they can go down as well. To help you save on auto insurance, 21st Century Insurance offers a range of discounts: multiple vehicles, defensive driver, good student and more. Visit 21st.com for more information.

Please note: This information is of a general nature for educational purposes only. It must not be taken as advice and does not signify an endorsement. 21st Century Insurance is not responsible for any injuries or loss incurred.

Sources: www.iii.org; www.naic.org

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