As you get ready to buy an auto insurance policy, people suddenly feel the need to share some “advice” with you about the industry. You hear a story about a friend of a friend charged an exorbitant amount of money on their insurance premiums because their car was red.
“Really?” You say in amazement.
“Totally, insurance agencies charge anyone with a red car more money,” your friend says.
It’s a known fact that insurance companies think people who drive red cars are a bunch of speed demons, and therefore a financial liability. Except, that’s false. Motorists who drive red cars are not charged more on their insurance premium than people who drive a blue car or black car or any other car color. It’s this type of inaccurate information that leads people to distrust insurance agents.
At CoverHound, we prides ourselves on an accurate car insurance quote comparison tool, and the chance to give you the most up to date, competitive policy information available from an assortment of reputable insurers. Steer clear of the nonsense by taking a look at these four car insurance myths to be aware of as you search for that new policy.
1. You only need the minimum amount of insurance as set by your state
Nearly every state in the U.S. requires that you carry an auto liability insurance policy. What’s important to note here is that is it the minimum. Minimum coverage won’t necessarily cover the cost of damages and injuries after an auto collision, and paying out of pocket could cost you thousands of dollars. The Insurance Information Institute (III) recommends that motorists carry more than the minimum amount set by their state. They also suggest motorists carry a minimum of $100,000 of bodily and injury protection per person and $300,000 per traffic accident.
2. You can only get a new insurance policy after your existing coverage package has expired
A lot of auto insurance carriers believe that they cannot cancel an existing policy. But the truth is, they can. Motorists can cancel their policy at any time. But before doing so, the Department of Motor Vehicles (DMV) advises that motorists get their new policy before cancelling their current one, as anyone driving around without insurance will be hit with steep fines or even a driving suspension. If you do cancel your insurance services before they expire, you may be subject to fees, ranging anywhere from $30 to $300 from top insurance agencies. Before you make the switch, compare your fees to the savings you’ll get with another insurance plan. This will help you to determine if making a switch is the right move.
3. Your financial credit has no bearing on your insurance premium
In the insurance world, your credit score is held as an indicator of personal responsibility. If you’re an individual who pays every bill on time and manages your assets accordingly, you’re considered responsible. If you’re this responsible in your personal life, insurance agencies assume that you’re this responsible in your public life. A good credit score will then net you a lower premium payment. However, if you’re in credit card debt up to your knees and your record is spotted with unpaid notices, you’ll be paying a higher premium. Remember, the more conscientious you are, the more willing your insurance agent is to cut your cost.
4. If your friend borrows and wrecks your car, damages will not be covered by your insurance
In a majority of the states in the U.S., your car insurance package covers the vehicle in an accident. This means it is the owner of the vehicle’s insurance that will cover the damages caused by an auto accident, regardless of who was behind the wheel. Though keep in mind that insurance plans change from state to state, so what may work in California doesn’t necessarily work in Georgia. Before lending your car to your best friend for the day, make sure your policy will protect your assets in the event of an accident.
Curious what CoverHound can do for your auto premium savings? Use our car insurance quote comparison tool today to see what you’ve been missing.