Every state has its own set of rules and regulations regarding auto insurance. Some states require drivers to carry set limits of liability insurance, while others like New Hampshire and Wisconsin require drivers to prove they are able to pay any necessary claims. Before purchasing a new or used vehicle it is important to contact multiple insurance carriers to familiarize yourself with your state’s specific requirements and what types of auto insurance are best suited for your vehicle and driving situation. Below is a set of commonly held myths regarding auto insurance. Take the time to read each one so that you are better prepared to purchase the right amount of coverage.
Myth #1: Collision insurance protects my vehicle from damage caused by objects other than motor vehicles.
Unfortunately, collision insurance only covers damage caused by an accident involving a motor vehicle. Even in the event of a vehicle collision, it is subject to financial limits. To protect yourself and your vehicle/vehicles, it is important to purchase additional comprehensive insurance. Comprehensive insurance protects drivers from events like vandalism, theft, and fire.
Myth #2: My auto insurance policy covers rental car insurance.
Some auto insurance companies may cover rental cars, but most do not. Credit card companies will sometimes cover rental car insurance if the individual pays for the full amount of the rental on the card. Check your insurance policy and credit card benefits to be sure.
Myth #3: You are required to get multiple estimates from repair shops in the event of an accident.
Today, most insurance companies have a list of “network” repair shops. These shops have an insurance adjuster working within the building to make sure the process is as easy as possible. However, it may be in your best interest to get multiple estimates if you are going to have to cover more than your deductible.
Myth #4: My policy covers lending my vehicle to friends and family.
Your vehicle is your responsibility. If a friend or family member uses your vehicle without their own auto insurance coverage, you are responsible for damages. Please contact your provider before anyone else operates your vehicle to determine the specific rules of lending your car.
Myth #5: The state or federal government sets my auto insurance rate.
Auto insurance rates are determined by driver’s age, sex, driving history, car’s location, and type of vehicle. The state regulates these factors, not the federal government.
Myth #6: My personal auto insurance covers my occasional business use of the vehicle.
The personal and business uses of a vehicle are two very different circumstances. You could be subject to penalties as well as the loss of coverage if you are involved in an accident involving business, but are only covered for personal use. Contact your provider about what coverage best suits your situation.
Myth #7: I get a large tax credit for driving a hybrid vehicle.
Hybrid vehicles have many advantages such as fuel economy and safety. However, most states have a limit of tax credits available for each make and model of hybrid. Some of these tax credits are still available. Most discounts are given by the insurance company due to the fact that hybrid drivers are less likely to be in an accident than non-hybrid drivers.
Myth #8: Credit scores don't affect insurance costs.
Wrong! Your credit score not only factors into the initial purchase of coverage, but also determines the amount of your premium when you renew your policy.
Myth #9: The color and style of my vehicle affects my auto insurance policy.
Certainly, the style of a vehicle affects insurance costs. This is because some car styles have additional safety or theft deterrent features which will lower your insurance rates. Color does not affect your policy.
Myth #10: I only need the smallest amount of coverage.
For the financially responsible driver, maintaining the optimal amount of auto insurance is essential. Under-insured drivers make up about fifty percent of drivers on the road today.
Defensive Driving Techniques
Sadly, there were more than 40,000 auto-related deaths in 2006 and 2.6 million people with injuries from traffic accidents according to the National Institute for Highway Safety.
Glossary Auto Insurance
It is extremely important that each driver understands the fundamental basics of auto insurance before buying coverage. Know exactly what you are buying, and what your policy will include.
How to Select Auto Insurance from Quotes
In every state, there are multiple insurance carriers.