10 Myths About Auto Insurance You Should Stop Believing

Auto insurance is essential, but many misconceptions persist, making it harder for drivers to understand their coverage. Here are some common myths debunked to help clarify what your policy actually covers.

Red Cars Cost More to Insure

One of the most widespread myths is that red cars are more expensive to insure. The truth is that insurance companies don’t consider car color when determining premiums. They focus on factors like the car's make, model, and age.

• Impact of car color on insurance rates: None
• Primary factors considered: Make, model, age
• Typical premium difference by color: $0

Older Cars Don’t Need Full Coverage

Some drivers believe that if they have an older car, they don’t need full coverage. While it’s true that the value of an older car is lower, full coverage can still be important, especially if you depend on your car daily.

• Percentage of drivers with older cars opting out of full coverage: 45%
• Average cost of repairs without full coverage: $1,000+
• Increase in out-of-pocket expenses: Significant

Your Insurance Covers Anything Stolen from Your Car

Many people assume that if personal items are stolen from their car, auto insurance will cover the loss. In reality, your auto policy generally covers the vehicle itself, while stolen personal items might be covered by homeowners or renters insurance.

• Coverage for personal items stolen from the car: Typically not included
• Policies that may cover personal item theft: Homeowners, renters insurance
• Frequency of this misconception: High

Minimum Liability is Enough

Some drivers think that the state’s minimum liability coverage is sufficient. However, minimum coverage might not fully protect you in a serious accident, potentially leaving you responsible for large out-of-pocket expenses.

• Average state minimum liability coverage: $25,000
• Potential cost of a serious accident: $100,000+
• Percentage of underinsured drivers: 20%

Credit Scores Don’t Affect Insurance Rates

It’s a common misconception that credit scores have no impact on auto insurance rates. In reality, insurers often use credit-based insurance scores to help assess risk and determine premiums.

• Impact of credit score on insurance rates: Significant
• Difference in premiums for good vs. poor credit: 20-50%
• States where credit cannot be used for rates: California, Massachusetts, Hawaii

New Cars are Always More Expensive to Insure

While new cars can be more expensive to insure due to their higher value, it’s not always the case. Some new cars come equipped with advanced safety features that can lower insurance premiums.

• Insurance cost difference for new vs. old cars: Variable
• Role of safety features in premium calculation: Important
• Percentage of new cars with premium-lowering features: 70%

Comprehensive and Collision Coverage are the Same

Comprehensive and collision coverage are often confused, but they cover different scenarios. Collision covers damages from accidents, while comprehensive covers non-collision-related incidents like theft or natural disasters.

• Collision coverage: Accidents
• Comprehensive coverage: Theft, weather, vandalism
• Drivers confused about the difference: 40%

Only Bad Drivers Need Insurance

Some believe that only those with poor driving records need insurance, but insurance is a legal requirement for all drivers, regardless of their driving history. Even the best drivers can get into accidents.

• Legal requirement for insurance: Yes, for all drivers
• Average insurance cost for good drivers: Lower, but still required
• Percentage of drivers without insurance: 13% (varies by state)

Accidents that Aren't Your Fault Won’t Affect Premiums

Another myth is that if an accident isn’t your fault, your premiums won’t go up. While this can be true in some cases, there are situations where your rates might increase even if you weren’t at fault.

• Premium increase after not-at-fault accident: Possible
• Factors influencing the increase: Claims history, insurance company policies
• Average premium hike after not-at-fault accident: 10-15%

Your Car Insurance Covers Rental Cars Automatically

Many drivers assume their personal auto insurance automatically covers rental cars. However, this isn’t always the case, and additional coverage may be needed, especially for rentals outside the U.S.

• Automatic rental car coverage: Not guaranteed
• Percentage of drivers assuming coverage: 50%
• Recommendation: Check with your insurer or purchase additional coverage

Understanding the truth behind these myths can help you make better decisions about your auto insurance, ensuring you have the coverage you need without any surprises.