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4 car insurance myths

April 22, 2015

There are plenty of fallacies that circulate in the auto insurance world, and a lot of them stem from drivers simply not understanding their insurance coverage. A thorough examination of the policy will debunk most of these myths, but there are a lot of common misconceptions that have been around so long they are mistaken as facts. Here are four of the standard myths about auto insurance and the real truth behind them.

Do you believe any of these car insurance myths?

1. Red cars are harder to insure than any other color

It has been long believed that a car being red increases insurance premiums, but that's not the case. According to Psychologist World, red is associated with higher blood pressure, faster metabolism, increased heart rate and aggression, so it's easy to see why this myth has lasted for so long. Part of that myth also stems from drivers believing red cars receive more moving violations, such as speeding or reckless driving. However, that's not true either. Auto insurance companies don't see color when creating your policy. Instead, the car elements that come into play when determining insurance rates are the make, model, engine size, body type and age, according to the DMV.org

2. Insurance follows the driver

False—Insurance follows the car, not the driver. So, next time you hand over your car keys to a friend, understand you're also handing over your car insurance, too. Unless you explicitly exclude the driver from your insurance policy, if a friend or family member gets in an accident while driving your vehicle, and its their fault, your auto insurance takes primary coverage status, according to Esurance. That means you, as the car owner, will have to file the claim, pay the deductible and possibly experience a rate increase. It's certainly not illegal to allow your friend to take the wheel, but you might want to think twice about letting your accident-prone buddy take your car for a spin.

3. My credit score won't affect my insurance rate

According to the Insurance Information Institute, your credit-based insurance score is developed by how well you handle your financial affairs rather than your assets, and it helps insurance companies determine how likely you are to file a claim. In fact, they often review your insurance score whenever you want to purchase an insurance policy, renew it or change it. The end result can be good or bad depending on how good your insurance score is.

4. I'm covered if my car is damaged by a storm or vandalized

This one is partly true, it just depends on what kind of coverage you have. Many drivers mistakenly believe their auto insurance policy automatically covers damages from, for example, a falling tree branch or golf ball-sized hail. In reality, this is only protected under adequate comprehensive coverage, which is an optional component in your auto insurance policy. Contact your insurance agent or review your policy to find out if you have comprehensive coverage.