7 Car Insurance Myths and How They Affect You - Do You Know the Truth?

Thursday, August 27, 2009

Myth #7: "The color of my car contributes to how much I pay for insurance."
Truth: The color by itself doesn't affect how much you pay. It may, however, affect how visible you are to police. If you're prone to speeding, you may be more likely to get a ticket... and that will certainly affect your car insurance rate.
Myth #6: "If I lend my car to a friend and that friend is in an accident, his or her insurance company will pay for the damages."
Truth: Your car, your responsibility! However, your friend's insurance could act as excess insurance if the damages exceed your policy's limits. And even though you weren't present at the time of the accident, it will go on your insurance record & your insurance premium will go up.
Myth #5: "My laptop, books, CDs, iPod or anything else in my car is covered if it's stolen."
Truth: Your car insurance policy only covers your car. Contents within your car are only covered by Home Owner's or Renter's insurance.
Myth #4: "My age is the determining factor in my car insurance rates."
Truth: Your car insurance takes into account the number of years of driving experience you have, not your age. Most people assume this as most people get their driver's license at age 16 and see that their insurance get's cheaper as they get older. It wouldn't matter if you got your driver's license at age 50. You'd still be a new, inexperienced driver and the cost of your insurance would reflect that.
Myth #3: "I don't need to buy the extra insurance offered to me when I rent a car."
Truth: Depending on your coverage you may not. The same coverage you have on your car will apply to the rental car. If you have only liability coverage, then any damage to the rental car is not covered. If you have comprehensive and collision coverage, your rental car will be covered, however, you'll still have to pay your deductible. Plus, it's possible that the rental company may continue to charge you for the rental car while it's being repaired.
Myth #2: "My car insurance covers my car whether I use it for pleasure, commuting or for business."
Truth: The insurance companies base your rate on how you use your car. If you tell them it's only to commute to and from school but you're also using it to deliver pizzas or take your clients out on business trips, you may be denied coverage if you get into an accident.
Any business use of your car should be disclosed to your insurance company. They may charge you a couple more dollars (it's generally a pretty small increase) but it's important that they know. Be sure they know the truth about how you use your car or you may be paying for nothing.
Myth #1: "As long as I have an insurance ID card, I don't need to pay for my insurance."
Truth: In California, your registration will be suspended if you do not keep your insurance policy in good standing. Not to mention, if you get into an accident, you are responsible for the cost of everything (damage to cars, injuries, loss of income, pain and suffering, etc.). The insurance companies now report driver's whose policies have lapsed so be sure to pay your bill.


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