10 Common Auto Insurance Myths

By: Ben Cavallo, CIC, AAI, CISR

Together with partner Keith Signoriello, Ben Cavallo is the principal and co-owner of C&S Insurance.

Today, we are myth-busting some claims we often hear about car insurance. Have you ever been told that having a red car will cost you more, or that getting a ticket will automatically increase your insurance prices? Read on to learn the truth behind these widespread—but false—ideas.

Myth 1: “Your credit does not impact your insurance rate”

This is untrue—your credit history may impact your car insurance rates. Insurers sometimes use your credit history to calculate a credit-based insurance score. This is because your credit history gives them an idea of how you manage your finances and may point to how likely you are to file a claim. People with higher credit scores tend to get into fewer car accidents, so they often pay less than those with lower credit scores.

Myth 2: “Your insurance will cover tree and weather damage, vandalism, and theft”

The most basic auto insurance policies will typically not cover damage to your vehicle that results from falling trees, weather, fires, vandalism, and theft. However, purchasing a comprehensive policy can protect you from these costs.

Myth 3: “Getting a ticket will automatically increase your insurance costs”

A speeding ticket won’t always increase your insurance rates, especially if your record is otherwise clean. If you do need to reduce or remove the marks on your record, some states offer safe driving courses you can take that can benefit your record and your rates.

Myth 4: “You don’t need more car insurance than what is required by law”

Most US states require you to buy a minimum auto insurance policy. However, this policy likely will not provide the amount of coverage you’d expect. It’s recommended that you purchase a policy covering at least $100,000 of bodily injury protection per person. Buying only the state-required minimum likely means you’ll pay much more out of pocket in the event of an accident.

Myth 5: “Personal insurance covers business use of your vehicle”

It’s not true that your personal auto insurance will cover you if you are driving your car for business purposes, even if you’re self-employed. It’s important to find this out from your insurer and to purchase business vehicle insurance if necessary.

Myth 6: “The color of your car affects your insurance costs”

It’s often rumored that certain car colors—most commonly, red—cost more to insure than others. While this myth is based on the idea that drivers who choose flashier car colors are more likely to take risks on the road, the truth is that color is not a factor used by insurers when determining prices. However, the make and model of your car are certainly taken into account. So are its sticker price and age. Your driving record, age, and sometimes your credit history are also important factors in determining your auto insurance prices.

Myth 7: “More expensive cars always cost more to insure”

How much you paid when you purchased your car doesn’t necessarily affect how expensive your insurance will be. The repair costs generally have much more of an impact. Sometimes it costs more to repair mid-priced cars than luxury cars.

Myth 8: “Car insurance prices increase as you get older”

This is certainly not true—in many cases, as you get older, you can become eligible for special car insurance discounts. AAA, AARP, and many local and state agencies offer accident prevention courses for those aged 55 and up, and completing these courses can reduce your premium. Those who are retired—and therefore are driving less often—may be eligible for discounts, too. Check with your insurance providers to see if you qualify.

Myth 9: “If another person crashes your car, their insurance will cover the damages”

In most states, the law is that your car insurance covers the damages to your car, regardless of who is driving it. However, these laws vary by location, so do your research for your state and your insurance policy.

Myth 10: “Soldiers pay more for car insurance than civilians”

If you’re in the military, you qualify for a car insurance discount. By providing proper documentation, you can make sure you’re not paying more than you need to. Some insurers also offer discounts for veterans and military family members.