Auto Insurance Myths: Debunked!
Our Underwriting team debunks a few of the biggest auto insurance myths!
When purchasing an auto insurance policy, it is vital to understand the factors that affect your policy costs and coverage. Unfortunately, there’s a lot of bad information out there – and we’re here to set the record straight!
Myth 1 – Color determines the price of your auto insurance.
Red, white or neon green – the color of your car does not factor into your auto insurance costs. Underwriters price your policy based on other factors, though, like car make, model, body type, and engine size, age of vehicle, and even market value, safety record and features, as well as likelihood of theft.
Myth 2 – Your credit score does not influence insurance rates.
There’s a difference between credit scores and insurance scores. Credit scores predict credit delinquency, while insurance scores predict insurance losses. Both types are calculated from information found in a credit report, and both play into insurance rates. Actuarial studies have found that individuals with good credit are more likely to pay less for their insurance and less likely to file a claim. Poor credit doesn’t mean you won’t be able to purchase insurance, but the premium will likely be higher.
Myth 3 – You only need the minimum amount of auto liability insurance required by law.
While the short-term benefits of buying minimum coverage seems like a financially-savvy decision, in the event of an accident, you are likely to pay more out-of-pocket for losses occurred after an accident. And those costs may be steeper than the extra $50 a month you think you’re saving when buying your state’s minimum coverage!
Myth 4 – If another person is driving your car, in the event of an accident, their auto insurance will cover damages.
This varies by state, though in most states, the auto policy covering the vehicle is considered to be the policy that pays for damages caused by an accident, regardless of who is driving. Be sure to understand the state-mandated regulations before allowing another person to drive your car!
Myth 5 – If I’m a driver for a rideshare app, my normal insurance will cover me.
We can’t stress enough that this is not the case.
If you are interested in becoming a driver for a rideshare app, contact your insurance company to discuss your options.
Many insurance carriers write mandatory exclusions into your personal auto coverage, making it very clear there are serious coverage gaps between your personal auto insurance and the master policy provided by the rideshare company you drive for.
*This also applies to delivery of other goods, too, like Grubhub, Doordash, and UberEats.*
From coverage that makes you feel right at home to feeling safe out on the open road, get the protection you need to live in the moment and prepare for the future. At Preferred Mutual, we call this living assured. Find an independent agent near you to discuss how to make your auto insurance policy work to meet your needs and live assured.