Myths About Car Insurance

Myths About Car Insurance

By car insurance myths, we mean misinformation rather than old fables.

Unfortunately, there aren’t any exciting stories about car insurance gods and monsters—although understanding an insurance policy can occasionally feel just as complicated.

The bigger problem is that common myths can influence real financial decisions.

Believing the wrong thing about car insurance rates, coverage, or your driving record could leave you paying more than necessary, or choosing a policy that doesn’t provide the protection you expected.

Some of the most common misconceptions involve:

• What actually affects your car insurance premium.
• Whether the cheapest policy is automatically the best deal.
• How accidents, tickets, and safe driving habits can affect insurance.
• Whether a newer or more expensive car always costs more to insure.
• How much coverage you really need when buying your first car.
• Whether you should stay with the same insurer year after year.

These questions matter because insurance is already a significant part of overall car ownership costs.

When you’re buying a car and choosing coverage, you don’t want outdated advice or misinformation determining how much you spend, or how well you’re protected.

So, which popular beliefs are true, and which ones should finally be retired?

Let’s break down the most common car insurance myths and look at what drivers actually need to know.

Any Accident Will Cause Your Car Insurance Rates to Increase 

Several drivers take the advice “avoid accidents” extremely literally.

To them, even a minor accident they didn’t cause will be punished by their car insurance provider with higher rates.

This is not the case. Your car insurance rates won’t always increase when you file a claim.

Fault plays a big role in car accidents because it determines whose car insurance will be used to cover damages and injuries.

It’s usually that driver who will experience increases in their insurance rates, not the other ones involved in the crash they caused.

The at-fault driver then files a liability claim while the other drivers file any collision coverage they have.

Filing a collision coverage claim when involved in an accident won’t increase your rates either since you weren’t at fault for the accident.

Accidents, minor and major, should always be reported –that won’t increase your rates either.

The report will also help determine fault when it isn’t clear at first. 

Traffic Tickets Will Cause Your Car Insurance Rates to Increase

Specifically, traffic tickets for nonmoving violations are of no concern to your car insurance provider.

They typically won’t affect your driving record a whole lot too.

However, more serious tickets for reckless driving and several speeding violations can increase your car insurance rates.

This doesn’t stop some drivers from panicking when they come back to their parked car and find a ticket.

Rest assured your affordable car insurance provider will not find out about tickets such as these because they don’t show on your driving record when it comes time to renew your policy. 

Car Insurance Rates Are Higher For Leased Cars

While leased car owners do pay more for car insurance, it’s because their leasing companies require more broad coverage.

They typically ask their leasees to carry full car insurance as opposed to just basic liability coverage.

However, the car being leased has nothing to do with the insurance rates. Several drivers who own their cars often opt for full coverage due to the protections it offers outside of just liability.

There is not much to compare between how much an owner and a leaser would pay for full car insurance because they are in the same ballpark. 

If Someone Using Your Car Gets Into an Accident, Their Own Car Insurance Will Cover The Damages They Cause 

It’s a common misconception that car insurance follows the driver.

Rather, it follows the car that was listed on the policy.

The names of people on the policy are those who are covered when driving it.

The primary name is usually the owner of the vehicle.

Whether their insurance policy will cover when other people drive their car depends on whether they are listed on the policy, their own car insurance, and if they are excluded from the policy.

People living in the same households often have the easiest time doing this. 

Safety Features Can Lower Your Car Insurance Rates by a Significant Amount

While most car insurance companies do give out discounts for added safety and anti-theft features on your car, they aren’t that big.

Some features like motion scanners can even increase your car insurance rates because they would be expensive to repair if they were damaged.

These discounts can range from 2% to 10% at the maximum. Before installing high-tech safety features on your car ask yourself if you can afford the replacement.

The decrease in the small car insurance rate may not be worth the installation. 

If Your Car Gets Totaled, Your Car Insurance Covers The Remaining Amount Owed if it was Financed or Leased 

If a leased or financed car is totaled beyond repair and still has payments remaining on it, it falls upon the driver to cover it and not the insurance company.

This is precisely why there is gap insurance for covering any literal gaps such as this in your car insurance.

At this point, many are aware of this when they lease their cars but misunderstandings still happen. 

Red Cars Are Subject to Higher Car Insurance Rates

You’ve probably heard the warning before: buy a red car and you’ll pay more for car insurance because red vehicles attract more attention, get more tickets, or are more likely to be involved in accidents.

It’s one of the most persistent car insurance myths.

In general, insurers are interested in factors such as the vehicle’s make, model, age, value, repair costs, safety features, where you live, your driving history, and the coverage you select, not whether your car is red, silver, black, or white.

For a beginner driver, there are much more important things to consider when choosing and insuring a first vehicle:

• Check insurance quotes before buying a particular make and model.
• Understand your deductible and coverage limits.
• Learn the car maintenance checklist beginner driver must know, including tires, brakes, lights, fluids, and warning indicators.
• Build safe driving habits and keep your driving record as clean as possible.
• Understand the legal complications that you may face after speeding tickets, distracted driving, or an accident.

So, if the red car is the one you’ve been dreaming about, its color alone shouldn’t scare you away because of an insurance myth.

Pay more attention to the car itself, its ownership costs, your coverage, and the driving decisions that can actually affect your risk and expenses.