Home » Insurance » Auto Insurance » Auto Insurance Misconceptions

Auto Insurance Misconceptions: 5 Things People Wrongly Believe

Updated: June 29, 2018

Auto insurance is something that every driver in the United States must get at some point in their lives.

However, there are still a lot of auto insurance misconceptions, which lead to people making incorrect decision regarding their auto insurance.

Popular misconceptions about auto insurance are detrimental because they lead people to make a bad decision regarding the type of insurance they need.

The list of common misconceptions relates to how insurance premiums are decided and what is covered by auto insurance.

Here is a look at the top five myths people think are true about auto insurance.

Red Cars Mean Expensive Premiums

This is such a bizarre misconception about auto insurance, because it sounds absurd when someone says it. However, this myth has passed from one person to another for so many years that many people believe it as fact.

One reason this misconception may have grown is because a lot of sports cars have flashy colors, such as red and yellow.

The truth is that a car’s color has absolutely no impact on the price of auto insurance for this vehicle. Insurance companies do not factor in car color at all.

One reason this misconception may have grown is because a lot of sports cars have flashy colors, such as red and yellow. And sports cars do have far higher insurance premiums than regular vehicles.

However, the high premiums for sports cars have nothing to do with their color. Their premiums are higher because sports cars are more expensive to fix. In addition, sports car drivers are more likely to get into car accidents.

If you have a red Ferrari, the insurance premium will be very high. But if you have a red Honda Civic, do not expect a higher premium because you chose a flashier car color.

Age Does Not Impact Premiums

A lot of people think that their age has no impact on their insurance premiums. This falls under the category of myths that people think are true, because the fact is that age does have an impact on how much you pay for auto insurance.

Another statistic shows that men under the age of 25 are statistically the likeliest group of people to get into a car accident.

It is statistically proven that people under the age of 25, and over the age of 65, will get into more car accidents. Insurance companies use this information to give these individuals higher auto insurance premiums.

Another statistic shows that men under the age of 25 are statistically the likeliest group of people to get into a car accident. This group also has the highest insurance premiums – on average.

If you fall into any of these groups, you may find yourself paying higher premiums than someone else who has the identical vehicle make and model.

However, there are ways for people in this group to eventually reduce their insurance premiums through avoiding accidents, not getting any traffic tickets and getting good grades if they are a student. Paying premiums on time also helps.

What Happens When Someone Else Wrecks Your Car

For some reason, there are auto insurance misconceptions surrounding the aftermath of someone else driving your vehicle and getting into an accident. A lot of people think that they are not responsible if they let a friend borrow their car, and that friend gets into an account.

Too many people loan out their cars and do not warn their friends or family about the implications of an accident.

In reality, a person is responsible for something that happens with their vehicle if they own it. The only time you are not responsible is when your vehicle is stolen and you reported it as such.

This is among the list of auto insurance misconceptions that has a major impact in the real world. Too many people loan out their cars and do not warn their friends or family about the implications of an accident.

If you are planning to let a friend or family member borrow your car for an extended period of time, have them get some form of temporary auto insurance. This will ensure that their temporary policy can cover the cost of damages if they get into an accident.

Credit Score Does Not Impact Car Premiums

This is one of the popular misconceptions that has a very serious impact on how people live their lives. A lot of individuals think that their credit score has no impact on the auto insurance premiums they are offered. This is completely false.

The reason auto insurance companies consider a credit score is because it is an indication of an individual’s trustworthiness.

Even if you have been a good customer for an auto insurance company for many years, your credit score plays a role when you are looking for a new policy. Auto insurance companies perform credit checks whenever they are finalizing insurance quotes for an individual.

The reason auto insurance companies consider a credit score is because it is an indication of an individual’s trustworthiness. Someone with a poor credit score does not pay their utility bills or credit card balance on time.

Even if you have a very low credit score, there are ways to get it up over the next few years.

Ensure you are paying all of your bills on time, do not apply for credit cards that you cannot manage to pay off and deal with any outstanding debts or student loan issues immediately.

Collision Covers Any Type of Damage

Everyone wants to save money on auto insurance. This is why the auto insurance misconceptions lead us to make some poor choices. One of those misconceptions is that collision auto insurance coverage includes protection for any type of damage to a vehicle.

If someone wants protection for theft and vandalism, or other stationary impacts, they need to get comprehensive coverage with their auto insurance policy.

This is among the myths that people think are true, but this myth is completely false. Collision coverage is only there to cover damage that occurs when you get into an accident. Collision does not protect against other types of damage.

For example, your car may suffer damage while it is parked outside your home. A tree could fall on it during a thunderstorm, or someone could key your car as they pass by the house. Collision coverage would not pay for these damages.

If someone wants protection for theft and vandalism, or other stationary impacts, they need to get comprehensive coverage with their auto insurance policy.

Comprehensive coverage does increase the overall cost of an auto insurance plan, but it is worth the money for newer and more valuable cars. Many car loan plans also make this form of insurance mandatory.