We may think we know a lot about car insurance—after all, we have to buy it, right? Every state in the country requires drivers to have car insurance in effect for their vehicles. Still, many consumers buy into some pretty far-fetched ideas on the subject. So you don’t believe these car insurance myths, we’ll point them out right now.
Myth: All You Need is the Legal Minimum of Coverage – Fact: Who ever told you that buying just what the law requires is all you need? The fact is that simply purchasing the bare minimum your state dictates for legal liability coverage is putting yourself at serious risk. Suppose you have a serious accident and you are at fault. With injuries to yourself and the driver and possibly passengers in another vehicle, plus considerable damage, if your policy is the rock bottom of what’s required, you may face a big hit in your wallet. Not only can the other driver sue you for what your insurance doesn’t cover (because you only bought the bare minimum), you won’t have enough to cover your own out-of-pocket costs. And legal liability coverage doesn’t include collision or comprehensive coverage. Furthermore, it isn’t meant to be a full insurance package. Consult with your insurance agent to ensure that you have enough liability coverage to adequately protect you.
Myth: Car Insurance Covers a Car You Borrow – Fact: When a person buys car insurance, it covers their car and drivers listed on the policy. It doesn’t follow you as the borrower of someone else’s car. If you are driving, say, your friend’s car, and you get into an accident that is your fault, your friend will have to pay the deductible on the claim, may have his or her premiums jacked up as a result of your accident, and may not have enough coverage to take care of the incident. Not to mention the fact that your friend will be really angry with you. Don’t borrow a car unless it’s absolutely necessary and find out ahead of time if the car is adequately insured.
Myth: No-Fault Insurance Means Nobody’s At-Fault. – Fact: Whoever came up with this descriptive term had to be trying to confuse the consumer. No-fault insurance doesn’t mean that there’s no one at fault in an accident. There’s always going to be someone at fault, but it’s the insurance companies that ultimately make that determination, based on their investigation and what the evidence proves. What no-fault insurance actually means is that it doesn’t matter who’s at fault. For each party to the claim, that is you and the other driver, that person’s insurance company pays the claim for their policyholder. Plus, if you are determined to be at-fault, expect your car insurance premiums to increase.
Myth: Every Ticket You Get Jacks Up Your Insurance Rates. – Fact: For many people, getting a single ticket in five or six years won’t result in their car insurance premium going up dramatically. It depends on what you get the ticket for. Speeding tickets and other moving violations are what your insurance company looks at, rather than an accumulation of parking tickets. Each insurer has their own list of what they charge for. The best advice is not to get any tickets, certainly not two speeding tickets within a one-year’s period. That’s just asking for a premium increase – and don’t think your insurer won’t find out.
Myth: Everything I’ve Got In the Car is Covered. – Fact: No, your car insurance doesn’t automatically cover that fancy aftermarket stereo you just had to buy or the set of expensive golf clubs that someone stole while you were in the grocery store in the way home from the course. Most policies have a limited amount of coverage for contents, but it’s just that, low. If you do buy expensive stereo or other after-market equipment and want it covered by your car insurance in the case of theft, vandalism or loss in a collision, talk with your agent before-hand to find out if it is covered under your policy. Most content losses are covered and can be claimed under your homeowner’s policy – but that will likely increase your rates for that coverage if you have two claims within a two-year period. Check your homeowner’s policy to see what it covers in your car.