
There
are a lot of car insurance myths that continue to be spread around by
consumers. One of the biggest reasons for car insurance myths is that you do
not exactly know how your car insurance is calculated by your insurance
company. These calculations are a closely guarded secret by most car insurance
companies, but there are a few clues as to what makes our car insurance rates
rise
It
is important when you compare car insurance rates to understand as much as you
can about how your car insurance rates are calculated and to debunk the popular
car insurance myths in order to ensure that you are saving money on car
insurance as much as possible.
Top 7 Car Insurance
Myths You Need to Know
1. The Color Of Your Car Does Not Matter
The
color of your car does not affect the price you way for your car insurance
premium. This is one of the most popular car insurance myths that continue to
circulate throughout the country and across generations. But, the fact of the
matter is that car insurance companies do not car what color your car is when
they calculate your car insurance premiums. There are many many auto insurance
leads that you can check out to compare insurance premiums.
Red
cars do not equate to a higher insurance rate simply for the fact of being red.
Car insurance companies care about their historical data on the likelihood that
your make, model, and year of car will be damaged. They care about your history
of driving and the likelihood that they will have to payout a claim against
your policy more than anything else when determining the price they will charge
you for your insurance premium.
2 . Sports Car Drivers
Always Have Higher Car Insurance
Owning
a sports car does not automatically equate to having higher car insurance.
Studies have shown that there are many other types of car classes, certain
makes, and models that are much more costly to insure than sports cars.
Car
insurance companies set car insurance premiums based on the cost and likelihood
of a claim based on each individual person and the type of car insured. Some
cars have historically higher repair costs and higher replacement parts costs
that can significantly increase the cost of their insurance premiums.
3.You Are Responsible
Even If Your Friend Is Driving
For
most car insurance policies, the insurance policy remains with the vehicle and
not the driver. So, if you allow your friend or someone else to drive your car,
you and your insurance company could still be still responsible for any damages
or injuries from an accident.
Once
your insurance policy has been maxed out, you may be able to tap into the
driver’s insurance policy in the event of an accident with a lot of damage and
loss. Do not make the mistake in believing the car insurance myth that you are
not responsible when you loan your vehicle to someone. You and your car
insurance could still be on the hook.
4. I’m Covered If My
Car Is Totaled
Your
car may not be completely covered by enough insurance to pay off your loan if
it is totaled. Often borrowers roll old car loans into new car loans, and most
new cars depreciate significantly as soon as you drive it off of the car lot.
This can create a gap between the true value of the car and the amount of money
that you owe the bank on your car loan.
Almost
all car insurance policies have a clause that they will only payout the cost of
your vehicle. They will not pay the amount of your loan balance if your car is
worth significantly less. You need gap insurance which is a separate and
specific type of car insurance used just for this purpose. Gap insurance covers
that gap between the amount your car insurance will payout and the rest of your
loan balance on the car.
5 .My Car Insurance
Covers My Rental Car
You
need to check with your car insurance company before you rent a car to ensure
that you have the proper car insurance clauses that cover rental cars on your
insurance policy. Not all policies cover rental cars. It is not an automatic
entitlement. You need to have it added to your current car insurance policy,
and typically this is a very inexpensive provision to add to your policy.
Depending
on the credit card you use, you may already have car insurance as a credit card
benefit. Many credit card companies offer car insurance coverage for rental
cars when you use their credit card. You should check to see if you’re covered
for rental car insurance by your credit card.
6. Items In Your Car
May Not Be Covered
You
may find that your personal property, like a laptop or cell phone, may not be
covered under your car insurance policy. These types of items are typically
excluded from your car insurance policy, and claims must be filed under your
homeowner’s insurance or renter’s insurance. This may not be very cost
effective though depending on your homeowner’s insurance deductible which often
tends to be higher than a simple car insurance policy’s deductible.
7. Using Your Personal
Car Insurance For Business
You
must have a separate business car insurance policy for your automobile if you
use your car for business purposes. Your personal car insurance policy does not
cover your car if you are using it for business related activities.
You
need separate personal and business car insurance policies in order to be fully
covered. Also, most business loans have clauses that you carry the proper insurance
coverage for commercial car insurance and not just a personal policy.
There
are many car insurance calculators on the internet that can help you find the
best prices for a policy. Green Slip Calculator can help you find the lowest
available prices for greenslip insurers based on your vehicle and details instead
of car insurance myths.
Car
insurance companies care about their historical data on the likelihood that
your make, model, and year of car will be damaged. They care about your history
of driving and the likelihood that they will have to payout a claim against
your policy more than anything else when determining the price they will charge
you for your insurance premium.
Everything
else is a car insurance myth that continues to circulate through society.
Knowing as much as you can about these car insurance myths and how insurance is
actually calculated will help arm you with the information you need to save
more money on car insurance.