Auto insurance can be complex and difficult to understand. With all the information available to policyholders, it can be challenging to decipher the facts from myths. Knowing what’s covered under your auto policy and the factors that determine your premium is crucial. What’s more, not understanding your coverage may lead you to believe you’re covered when that may not be the case.
To help clear up any misinformation surrounding your auto insurance policy and put your mind at ease, provided below are four of the most common auto insurance myths—debunked:
The color of your vehicle can affect your car premium.
Despite popular belief, the color of your vehicle has no impact on your auto insurance costs. When insurance companies are factoring your car into your insurance policy, they’re looking at the other components of your vehicle, such as:
- > The vehicle’s safety features and ratings
- > The vehicle’s make, model, year, body type and engine size
- > The likelihood that the car will be stolen or vandalized
- > The cost to repair or replace the vehicle following an accident
If someone else is driving your car and gets into an accident, their insurance will cover any damages or injuries.
The insurance held by the owner of the vehicle is typically considered the primary insurance in the event of an accident. So, regardless of who was driving when the incident occurred, the vehicle owner’s insurance is what will serve as the primary coverage to help pay medical bills or damages.
Your credit score has no effect on your insurance rates.
Your credit score is a significant factor insurance companies consider when they determine your premiums. Your credit score can show insurance agents how well you manage your finances and how likely you are to file an insurance claim. People with good credit tend to pay less for their car insurance since they are seen at a lower risk.
The minimum amount of liability coverage required by your state is adequate.
Although purchasing the minimum amount of coverage required by law may reduce your premiums, you may pay more out-of-pocket in the event of an accident. In many cases, it is advisable to select limits that are above your state’s minimum requirement. Severe accidents can be very costly when you consider the rising cost of medical expenses, court settlements and vehicle repairs. Liability coverage gets broken down into two basic segments:
- Bodily injury liability coverage: Can help cover any medical bills that may come from an accident if you are found at-fault. Within bodily injury liability there are two subcategories:
- Per-person limit is the maximum your insurance will pay per person.
- Per-accident limit is the maximum amount of bodily injury your insurance will cover per accident.
- Property damage liability coverage: Covers any damages to a person’s personal property.