Nine Myths About Auto Insurance That Can Hurt You

Responsible auto insurance policy owners must understand the truth on auto insurance. This article will dispel nine common myths about auto insurance and how to protect yourself from these myths.

1. If my car is totaled, my loan will be paid by my insurance. 
Again, the insurance company will only pay the Actual Cash Value of your car at the time before the accident. If you owe a substantial amount on your car before an accident, chances are you will end up paying on a loan for a car that is no longer drivable.

2. Full coverage can cover all accidents in full.
There is not a policy that covers all accidents in full. Auto policies have limits of what they will pay for damages caused to other cars. Also, if you total your car, you will only receive the Actual Cash Value of your car before the accident. It does not cover what it would cost to replace your vehicle.

3. Insurance companies have higher rates for red cars. 
Insurance companies don’t increase your rates for the color of your car. They increase your rates because of speeding tickets. The myth originated from people believing those with red cars are more likely to receive speeding tickets.

4. My policy covers anyone over 25 driving my car.
This depends on your policy. Generally, auto policies only cover those listed on the policy and for occasional drivers that have permission to drive the automobile.

5. Auto insurance purchased after an accident will cover that accident. 
Insurance is designed to cover unforeseen accidents and will not just pay for previous accidents for you. This philosophy compares to getting a lottery ticket after the numbers were announced 
and expecting to win.

6. If my friend borrows my car, his or her insurance will cover anything that may happen to my car.
This depends entirely on the state you live in. In some states, the friend who damages your car must reimburse the insurance company if the vehicle is damaged due to their negligence.

7. If personal property in my car is stolen, my car insurance will cover it.
Your auto insurance only covers your car and not any property inside of it.

8. To cover myself in any car I drive, I have to purchase non-owners insurance.
Auto insurance is meant to cover anything that you do in a car. The car isn’t going to be in court if a lawsuit is filed from a car accident. It will be you. Therefore, the auto policy generally will provide coverage for the policy holder when they are driving other people’s cars.

9. If I don’t list my teen on my policy, I won’t be held liable if they get in an accident. 
Parents will always be responsible for their children. Auto insurance policy for your teen drivers doesn’t make you liable (because you already are), but gives you an option for paying for that liability that won’t break the bank.

Being an informed auto insurance consumer will help you provide necessary coverage for your needs. Your auto insurance agent can go through any concerns you may have about how protected you are and look into better options for you and your family.