We're all guilty of being a little gullible every now and then and it's perfectly acceptable when it comes to things that we know little to nothing about. Car insurance is a great example. It's something that you only get when you need, and when it comes time to buy, you want to waste as little time as possible. But that attitude could be costing you.
Are these common auto insurance myths holding you back?
Myth 1: The Color of Your Car Affects Your Insurance Rates
Humans are a superstitious bunch. There are people out there who refuse to get into a green car, believing it to be bad luck. Similar beliefs are held about other car colors and this seems to have influenced the myth that red cars are more likely to drive fast and be involved in an accident.
The myth states that a red car, due to its proclivity for speed, is more likely to be involved in an accident and will therefore be charged much higher premiums.
There is some method to the madness, and it's not hard to imagine the logic behind it. After all, many young and reckless drivers seem to prefer red cars and it's also the color of choice for many sports cars. Once you consider that car insurance is all about risk, it starts to make sense.
But despite all of that, there is no truth to this belief. In fact, car insurance companies likely won't even know the color of your car. They focus on the make, model, and your driving history and they will also take the vehicle identification number (VIN) to get more info, but that doesn't stretch to the car's color.
Myth 2: It's Bad to Shop Around for Car Insurance
The idea that you shouldn't shop around for car insurance seems to stem from the belief that each quote will hit your credit score, but that's simply not the case. This is one of the many car insurance myths that could hit your wallet because if you're not shopping around, you're not getting the best auto insurance rates, which means you're spending more unnecessarily.
Myth 3: You Can Negotiate Your Insurance Rates
You can try to negotiate with car insurance companies, but it won't get you anywhere.
They don't operate like used car salesmen. They don't have huge margins to work with and they're not expecting you to haggle.
Insurance companies are all about risk. They look at your personal circumstances (driving record, age, location) and your vehicle (age, safety features) and they plug all of this data into an algorithm. that algorithm tells them how likely you are to make a claim and from that, they set your price.
It's a carefully measured process that ensures they make a profit from month to month, and it's not something that you can negotiate.
However, there are things that you can do to reduce your insurance costs. Taking defensive driving courses, for instance, will usually shave a few percentage points off your premiums, as will improving your credit score, fitting safety features in your vehicle, and opting for certain mileage-based schemes.
Myth 4: Your Credit Score Doesn't Affect Your Premiums
Drivers with low credit scores are more likely to be involved in an accident, and so their personal auto insurance rates will be higher. The difference isn't substantial, but it all feeds into the algorithm and is used to determine the final cost of your car insurance.
Myth 5: Parking Tickets Will Increase Your Insurance Premium
It is true that speeding tickets will increase your insurance premium. The same is true for a DUI, in which case the increase could be sizeable.
However, your personal auto policy shouldn't increase as a result of a parking ticket.
Myth 6: Comprehensive Car Insurance Covers Everything
Comprehensive coverage will cover you for weather damage and collisions with an animal, but it's not a complete auto insurance coverage option. You will need to purchase collision coverage if you want to be covered when you are involved in a collision with anything other than an animal.
Myth 7: More Expensive Cars Cost More to Insure
The cost of your car certainly impacts your car insurance rates, but a higher sticker price doesn't always equate to more expensive insurance coverage.
Insurance companies will consider the likelihood of being stolen and the safety features, as well as the cost to repair. It's not uncommon for mid-priced cars to be more expensive to insure than luxury cars.