Lots of drivers believe these misconceptions about car insurance — but they’re just not true.
Published August 30, 2019|5 min read
Getting auto insurance can be a confusing process — you’ve got to figure out how much coverage you need, compare quotes from different companies and then choose the offer that’s best for you. Throw misinformation into the mix and it’s no wonder that some drivers feel like they don’t even fully understand their car insurance policy. Don’t worry, we’re here to break down and debunk some of the most common myths about car insurance.
It’s not clear how this myth began, but it’s a popular one. Plenty of drivers believe, for whatever reason, that red cars cost more to insure, and that the color of your car will factor into your insurance costs. While some vehicle features will affect insurance costs — having an anti-theft device can earn you an insurance discount, for example — the color of your car has no impact on your car insurance rates, and a red car won’t cost more to insure than any other color vehicle.
One thing that might affect your car insurance, however, is a custom paint job. If you have a pricey custom paint color on your car that you added yourself, repainting after an accident wouldn’t be covered unless you’re specifically included coverage for vehicle customizations in your policy.
When you’re shopping for car insurance, one thing you’ll have to take into consideration is the minimum insurance requirement in your state. Almost every U.S. state requires drivers to carry a certain amount of auto insurance. Many states just require drivers to have liability insurance up to specific limits. So does that mean you should set your car insurance coverage at the state limits and be done with it? The answer to that would be a resounding no way.
Your state’s car insurance requirements are a starting point, not an ending point. But setting your car insurance coverage at the bare minimum can leave you dangerously unprotected. Say your property damage liability coverage is set at a limit of $25,000, and you cause an accident that results in $50,000 worth of damage. You would be personally on the hook for tens of thousands of dollars. And leaving your insurance at the state-required minimums also means your own vehicle won’t be protected, since no states require you to have comprehensive and collision coverage, which cover damage to your vehicle.
Another common car insurance myth is that men will always pay more for car insurance because insurance companies see them as riskier drivers. While this may hold true within some age ranges — young men, in particular, may see higher rates because of their demographics — it’s by no means a consistent truth. Sometimes, all other factors being equal, a woman may pay more for insurance than a man with the same profile. In many cases, your gender won’t affect your rate enough to notice a difference in your premium at all.
And in a handful of states, including California, Massachusetts and Pennsylvania, insurance companies are banned from using gender as a metric when calculating drivers’ car insurance premiums, meaning that drivers of any gender won’t have to worry about whether that will impact their rates.
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In recent years, available safety features on new vehicles have gotten smarter and more high-tech, from rear-view cameras to lane departure warning systems to high-tech headlights. All of this tech is meant to keep you from getting into a car accident, so it would stand to reason that it would also lower your car insurance rates, right?
Well, it turns out that that’s not always the case. Even though that tech keeps you safer, it’s also expensive to replace. Advanced driver assistance systems, or ADAS, have actually been found to raise premiums, because insurance companies are concerned about having to repair or replace the pricey sensors and computers that make those systems work.
That’s not to say, however, that there aren’t certain add-ons that can help you save money on your premiums. Anti-theft systems and GPS tracking can earn you car insurance discounts, as can certain safety features like electronic stability control.
Say you accidentally back your car into a telephone pole, crushing your back bumper. If you have collision insurance, the damage will be covered. But you’ll need a replacement car while yours is in the shop — will insurance cover that too?
Many drivers mistakenly believe that a replacement rental car will automatically be provided to you by insurance if your car is in the shop for a covered claim. But that’s not actually the case — you need to add-on rental car reimbursement to your policy if you want your insurance to cover the cost of a rental while your car is in the shop.
Rental car reimbursement is usually an affordable coverage add-on that won’t raise your premiums by any significant amount. It will cover your rental car up to a set amount — for example, your rental car reimbursement might cover you for $40 a day with a maximum payout of $900.
It just seems like common sense that a small car would cost less to insure than, say, an SUV or a minivan. After all, you may have paid less for you small sedan than your neighbor did for their crossover. But car size doesn’t correlate directly to insurance costs.
In fact, AAA’s 2018 Your Driving Costs study researched the ownership costs associated with different types of vehicles and found that the cheapest type of vehicle to insure was a small SUV, at an average annual cost of $1,074, and the most expensive vehicle to insure was a small sedan, with an average annual cost of $1,315.
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