Here are some of the misconceptions about car insurance that may sound correct but cannot be any further than the truth. Myths can prevent people from arranging the right coverage so they may have problems when they have a claim. Having the wrong information or idea can affect decisions and cost money too. Motorists should not easily believe things they don’t even know from whom they heard or where they read and confirm if it is true no matter how much they like the idea. So, here are some of the myths to debunk.
- Full Coverage Means I am Covered for Everything
Usually, you are considered to have full coverage car insurance when you have Liability, Collision and Comprehensive coverage on your policy and that is not everything. For example, you need to add Rental Car Reimbursement and pay additional premium if you want to be paid for a rental car you had to have because yours is in the garage being repaired for an insurance covered accident damage.
Motorists should also pay attention to policy exclusion and conditions. For example, there may be an age limit for permissive drivers so any driver under a certain age may not be included even if they have permission from the owner. In addition, full coverage usually doesn’t include business use, intentional damages to a car and has certain conditions like you cannot use your car for street or any kind of racing.
- Minimum State Required Liability Coverage Is Enough
Yes, you will meet the legal requirements if you only have basic liability auto insurance coverage required by your state. However, it does a lot more than keeping you legal. It pays damages and injuries you may cause to other motorists, pedestrians and property owners. The fact is that you will have to pay those losses out of pocket if your policy coverage is insufficient. That is why most experts recommend at least a $100,000/$300,000/$100,000 liability coverage to be in a realistically comfortable position to deal with claims against you after you are found at fault for an accident.
- It is OK for Parents to Pretend They Use the Car When It Is You
This may sound like an innocent trick. Why should you spend twice more for a policy when you can get your parents to insure the car on the pretence that they will be driving it and you will be a listed driver? This is called fronting and it is an illegal practice. Cars should be insured for the person who is driving it most of the time.
People get into serious trouble by getting the parents to pretend the vehicle is for their use when it is for a young person with a much higher-risk profile. Companies can cancel a policy and refuse to pay a claim if they find out that someone else is fronting for a higher risk driver. On the other hand, adding a more experienced driver to your policy will probably save you some money and it is perfectly legal even if that person hardly uses it.
- My Personal Gadgets Left in my Car Are Covered
It is common that thieves are breaking into automobiles to steal valuables like smartphones, laptops, SatNavs and cameras. Many people think that auto coverage will pay for the damages to the car and their stolen personal effects. Standard vehicle insurance doesn’t pay for personal effects that were left in the vehicle. They are not considered part of it and therefore it is not included in its valuation. Home or renters’ plans deal with these items. Even then, these usually come with an upper limit to what you can claim.
- If Other Drivers Crash My Car Their Insurance Pay for Damages
When you let someone else drive your automobile, your own vehicle insurance is still the primary policy for any damages to it and liabilities so any claim will go on your policy. If the driver has his/her own coverage, it is secondary to yours and only comes into play if you have insufficient Liability coverage. Standard policies only extend liability coverage when the policyholder is driving someone else’s auto and doesn’t pay for any physical damage to the car driven.
- You Shouldn’t Pay Deductibles If You Aren’t at Fault
If there is an at-fault third party driver with sufficient auto insurance coverage and his/her provider agrees to pay for your damages, you don’t need to pay deductibles. However, if you end up claiming from your own Collision coverage, you will pay the deductible even if it was someone else’s fault. Besides, motorists have no fault in most Comprehensive coverage claims like auto theft, hailstorm or flood and they still need to pay the deductible. At the end, it depends on whose policy and which coverage pays for it.
- Red Cars Costs More to Insure
This is another myth. Insurance companies don’t ask the color of the car when someone applies for coverage because it is irrelevant in terms of premium calculations. So, you can buy any color automobile you like and it will have no bearing on premiums.
- I Will Get a New Car If Insurance Totals My Auto
This is never the case with standard policies. They will look at the make, model, age and condition of your car and work out how much it would cost to buy a similar automobile so that they can pay you only that much. Insurance is only concerned with replacing your losses and not making you better off. Otherwise, people would be going around and crashing their old clunkers to get a new vehicle from insurance.
- Car Insurance Companies Offer Similar Prices
You are likely to pay higher premiums if you believe this myth and forgo shopping around when the renewal is due. Every company has its own risk rating methods that are reflected on their premium calculations. For exactly the same details, prices can be twice different between two similar looking insurers. That is why motorists should get at least 5 quotes if they want to save money.
- It Is Cheaper to Buy Direct
There is no real data showing that direct insurers are cheaper. The idea that they won’t pay commission to agents for direct sales and therefore can offer better quotes is a misconception that is easy to sell to unsuspecting motorists. That is why some companies like motorists to believe that they are cheaper for being a direct provider. Actually, they would have to spend a lot more to advertise and find customers who will come to them directly. And those advertisements are not cheap.
Besides, intermediaries like brokers and agents play a very important role and are still a cheap source of business. Trying to take them out of the equation is not a smart move unless they have a different plan. Direct insurers would rather corner defenceless customers without their brokers to advice or a comparison website to show alternatives.