When it comes to auto insurance many people rely on myths about what factors into their insurance rates and how they can help minimize their insurance cost. Throughout the years I have heard a lot of reasons why someone’s insurance should be higher or lower, and many of them are untrue. I have no idea how these misconceptions started, but many of them are deeply ingrained into insurance lore. Below I bust 4 of the most common myths of car insurance that I come across on a daily basis.
- “I have a red car so I know it will cost more money”
You can have a red car, green car, magenta car; the color has no bearing on your insurance. The year, make and model are all that matter in respect to what your insurance will cost for a particular vehicle. There are many other factors that affect your insurance rates as well, but car color is not one of them.
- “I am over 25 years old so my insurance should be cheaper”
People often think that just because they are of a certain age that inexperienced operator rates disappear. The reality is, whether you get your license for the first time at age 16 or age 30, you are just as inexperienced regardless of your age. Insurance rates are factored on how long you have had your license because it takes time to become a proficient driver. There is no magic age where you all of a sudden become an experienced driver without having years of practice behind the wheel.
- “My car is old so I only want the bare minimum insurance coverage”
Just because your car is a piece of junk does not mean you should carry low liability limits. The fact is you can kill someone with a jalopy just as easily as you can with a new car. People often gauge how much they want to spend on insurance based on the value of their car. Most of the coverages on an insurance policy deal with injuries you receive or injuries you cause to others. Having a beat up vehicle does not make it less likely that you will be injured or cause someone injuries in an accident. You can decide not to buy the coverage to repair or replace your car, but always carry as much liability and medical payments coverage as you can. It is also a good idea to carry comprehensive coverage on all cars, regardless of their age or condition. You may not use it if the car is stolen or vandalized, but free glass coverage comes from this coverage part. Windshields are expensive, and this coverage part is typically inexpensive in relation to the cost of a new windshield.
- “I didn’t have an accident last year and my car is a year older so my rates should go down”
Having no accidents and your car being a year older does not automatically equate to a lower insurance premium every year. Premiums increase based on a variety of factors including cost of repairs, vehicle cost, etc. Inflation has the same effect on insurance as it does on a gallon of milk. So many people think about their insurance as an ever decreasing cost because their vehicle ages and they have no accidents or speeding tickets. Inflation causes the cost of all things to increase, so your vehicle’s age does not equate to paying a body shop less money to repair your car, or that you can get a discount on parts because your car is older. The cost of insurance relates more to the overall cost of claims in general which includes the hourly rates for body shops/mechanics, parts, as well as lawsuits resulting from accidents, among other things. The more they charge, the higher the cost of insurance. Your accidents and vehicle’s age do play a part in your insurance cost, but a year without an accident or a vehicle aging by a year may not have a financial impact on a year to year basis.
For a better understanding of what affects auto insurance premiums, call your agent or carrier. They will be able to separate fact from fiction and provide you with an accurate representation of what your insurance carrier is taking into consideration when rating your policy.