Knowledge is power, and that’s as true when getting a car as in any other part of life. The better you understand how to protect and care for your vehicle, the more effectively you can do so, which is why it’s essential for you to have accurate information. This is particularly important when selecting car insurance. The auto insurance market is plagued by myths and misconceptions, which make it harder for drivers to weigh all the financial factors and cover their cars effectively. The following are some of the most common car coverage myths, which you must debunk before you try to select a policy:
Myth: The color of your car affects the cost of insurance, with red cars being the most expensive to cover.
Fact: Color and coverage cost have nothing to do with one another.
Insurance companies base the cost of your premiums on your age, your driving and credit history, and the vehicle’s make, model, age, engine size, and body type. More expensive cars also cost more to insure, and your premiums may go up if you frequently get into accidents or your vehicle becomes a popular target for thieves. But your choice of paint color has nothing to do with how much you’ll pay.
Myth: When you buy a new car, it will be covered automatically as you drive it off the lot.
Fact: Different insurers have different policies for covering new cars.
It’s true that many auto insurers offer automatic coverage for new cars. Typically, they will provide the same coverage for the new car as the highest level of coverage you have for another vehicle you own. But not all policies do this, so you should always check your insurance agreement rather than taking automatic coverage for granted. And if you don’t already own a car, you have to buy insurance well before you drive your car off the lot or it won’t be covered.
Myth: Minimum coverage will be enough for my car.
Fact: Minimum coverage probably won’t come close to meeting all your needs.
Drivers often assume they only need to get the minimum level of coverage required by law. But such coverage fails to protect you from a whole host of threats to your car. Most standard insurance policies don’t reimburse you if your vehicle is stolen; they also don’t cover damage from fire, floods, hail, tree limbs, or vandalism. All of these problems present a serious threat to both your car and your finances, so getting a comprehensive policy that covers all of them is likely a good investment.
Besides not protecting your car from a variety of serious sources of damage, minimum insurance policies fail to cover commercial driving. Thus if you plan to use your car for business purposes, you should purchase an insurance plan that includes commercial coverage. Supplementary business coverage is especially important if you let employees, contractors, or other business personnel use your car. Make sure your policy covers them, and check their driving records on a regular basis.
Myth: Men who are younger than 25 always pay more for car insurance.
Fact: Age and gender are just two factors out of many that affect your insurance rates.
This one is partially true, but misleading. Men generally do pay more than women for insurance, and premiums tend to go down as you age. Thus on average, men under 25 do pay more. But there are countless other factors that affect coverage, which can easily swamp the impact of age and gender. If you have a history of driving safely, for example, you can qualify for low premiums even if you’re male and well under 25. On the other hand, older women who drive recklessly still have to pay high premiums.
Myth: Your credit rating doesn’t affect your insurance rates.
Fact: Insurers take credit ratings into account in most states.
Most states, including Pennsylvania, allow auto insurers to look at your credit rating when determining your rates. All things being equal, car insurance costs a thousand dollars more per year for someone with poor credit than for someone with excellent credit. Thus if you can improve your credit score, you will achieve quick, tangible savings on auto insurance.
Myth: To keep my insurance premiums low, I shouldn’t report accidents when they happen.
Fact: If you don’t report an accident, the other driver will.
If you get into a crash with another car, you might think that your insurer can’t raise your premiums if they don’t know about it. But when the other driver reports the accident and demands compensation for injuries or auto damage, their insurer will contact yours to demand this compensation. Likewise, if a traffic cop gives you a ticket for the crash, that will go on your driving record, thereby driving your premiums up. So not only do you end up paying more anyway, but you make yourself look like a dishonest and risky driver. It is thus always better to report your accidents immediately.
Myth: If I still have a loan on my car, my insurer will pay it off if the vehicle is totaled.
Fact: It depends on the size of the loan and the value of your car.
In the event of a catastrophic accident, most insurance policies will reimburse you for the full market value of your car, which is the amount it was worth when you bought it minus any value it has lost through depreciation. But if you owe more than that on the vehicle, you’ll have to pay off the difference yourself. Say your car’s fair market value is $10,000; if you have an $8,000 loan, you’re covered, but if the loan is $12,000, you will need to pay $2,000. The only exception is if you purchase GAP coverage, which reimburses you for the difference between the car’s fair market value and the loan.
For more information on protecting and caring for your car, contact Baddell’s Collision today. We have locations in Aston and Malvern, and we’re prepared to provide you with exceptional service no matter what kind of damage your car has endured. Stop by one of our shops or use our simple online estimate form.