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Insurance Myths Debunked Part 2: The Most Popular Auto Insurance Myths

Apr 30, 2013

The purchase of a car goes hand in hand with the purchase of car insurance.  In “Insurance Myths Debunked, Part 2” we busted common myths of life insurance.  This article will focus on car insurance myths; separating fact from fiction.

Myth #1. Color matters.

On more than one occasion I’ve had a friend tell me when I’ve been car shopping, “don’t buy a red car because they’re in the most accidents;” or “white ones cost more to insure, don’t buy those.”

Guess what?  There may be some bits of evidence here or there about car color affecting accident rates, (trust us, distracted driving, like using your cell phone is a WAY BIGGER factor) but the color of your car affecting car insurance rates?  Not true.

So if you want to impress your friends with a red or a white car…do it.  The insurance you pay will be exactly the same as it is for a blue or black car.

Busted.

Myth #2.  New cars are more loveable for thieves.

The myth goes like this.  People steal new cars because they’re more valuable.  They are under the mistaken belief that people steal cars to be resold in whole.  Not true.  They are stolen to be stripped for valuable parts.  The valuable parts are in older cars.

But there are other reasons why older cars get stolen more often.  New cars have built-in alarm systems, whereas older cars don’t; thus, new cars are harder to steal.

The most stolen cars of both 2011 and 2012 were mid 1990s Hondas.

Busted.

Myth #3. I need the cheapest insurance and nothing more

Auto insurance protects four main entities:  Your body, your car; and other drivers’ bodies and cars if you should be the cause of an accident. Passengers in both cars are included in coverage as well.  Many people think that they only need the minimum and least expensive coverage.  And they might get lucky and get away with the minimum coverage.  But many people do not get that lucky.

Towing, rental reimbursements and additional levels of coverage do not ultimately cost the driver much more, but it will cost much, much more if you don’t have the coverage and do get in an accident.

Insurance is about peace of mind.  Having the proper levels of coverage that protect you in a variety of circumstances provides peace of mind.

Busted.

Myth #4. An accident will increase your rate. Dramatically. 

Everyone believes that an at-fault accident will cause their insurance rates to skyrocket.  This may or may not be true.  Many companies offer first accident forgiveness programs, which mean that a driver will not pay additional premium on their first accident.

Let’s say your company does not have an accident forgiveness program.  If you have a great payment record, as well as no points or tickets, you will likely not be increased as much as drivers who are chronically late with their payments and have a couple of speeding tickets. Insurance companies will make a determination that the second kind of driver is a greater risk, and will likely raise his rates.

The bottom line is, if you cause an accident, and it’s your first one, your rates will not go up dramatically … if you have followed the rules up to that point.

Busted.

It’s a big, noisy world out there with lots of information and misinformation floating around. Our advice is to leave the myths to the ancient Greeks and when it comes to car insurance do your homework.

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