10 Common Insurance Myths That Cost People Money

Think you know your insurance? You may be surprised. For instance, if you have to file a claim, do you really know everything that’s covered — and not covered — by your home and auto policies?

At C&S Insurance, our Massachusetts agents are industry experts, who can work with you to break down the details of your policies, find ways you can save on your premiums, and ensure you aren’t facing any coverage gaps. If you have questions about insurance in New England, we have answers. Get in touch today.

Let’s bust 10 common insurance myths and learn how you could save.

Myth #1: Your Car Insurance Will Automatically Cover Vandalism, Theft, or Weather-Related Damage

A tree limb falls on your car and dents the roof. Surely your auto insurance policy has you covered, right? Believe it or not, this is only true if you have comprehensive coverage. If you only purchase auto liability coverage — which is mandated in most states, including Massachusetts — you won’t be covered in the event of theft, vandalism, falling trees, hail, or other non-accident-related claims. If you want your vehicle to be covered in an at-fault accident, you’ll also need collision coverage.

Comprehensive and collision coverage are generally not worth purchasing if your car is worth less than $1,000, or less than 10 times the premium. That said, you do need these coverages if you want to protect your vehicle from these hazards.

Myth #2: Filing a Claim Is Always a Good Idea

It’s not always best for your wallet to file a claim to repair your home or vehicle. First, you should always check to be sure the cost of repairs exceeds your deductible (the amount you’ll always have to pay out of pocket). Second, understand how filing a claim may impact your rates in the future.

Even if you receive a $0 payout for a claim, filing one could negatively affect your insurance score, which companies calculate based on your credit rating and claims history. They use this score to determine the rates you pay.

However, it’s also not true that filing a claim will always raise your rates. Certain types of claims, such as auto accidents, will likely raise your premium, but non-accident related incidents like theft or weather damage are less likely to result in a rate increase.

Myth #3: Mortgage Companies Will Cancel Your Old Homeowners Policy When You Move

This isn’t true. You, as the homeowner, are responsible for canceling your homeowners insurance policy when you move. In fact, the insurance company can’t cancel the policy without your consent. If you forget to cancel your old homeowners policy, you could be charged for it. If you’re moving, add this important step to your checklist!

Myth #4: Staying With the Same Carrier for Many Years Will Get You the Best Rates

Loyalty can earn you discounts on your insurance policies, but getting a discount doesn’t necessarily mean you’re getting the best rates. You could be missing out on savings offered by other carriers.

Rather than automatically renewing your policies each year, experts recommend that you shop around to assess your options 30 days before your policy is set to renew. It’s a good idea to shop your home and auto insurance policies at the same time, because switching both to a new carrier could earn you bundling discounts.

Myth #5: Purchasing Your State’s Minimum Required Auto Liability Coverage Could Save You Money

Each state dictates how much auto liability insurance you legally have to carry. In Massachusetts, you need to have:

• Bodily injury liability limits of at least $25,000 per person and $50,000 per accident
• Property damage liability limit of at least $30,000
• In addition to liability coverage, you need bodily injury caused by an uninsured driver limits of at least $25,000 per person and $50,000 per accident

While you may be tempted to purchase the bare minimum auto liability coverage required by your state to save on your premium, it’s not guaranteed to save you money. In the long run, paying a little bit more each month will help you avoid paying costly bills in the event that you’re found at fault for an accident.

In addition, having higher auto liability limits could help bring your premiums down in the future. This is because insurance companies view people who have previously carried higher liability limits more favorably.

Industry experts generally recommend that you carry a minimum of $100,000 of bodily injury protection per person, $300,000 of bodily injury protection per accident, and $100,000 of property damage coverage per accident. This is known as the 100/300/100 rule. However, if you have substantial personal financial assets to shield from lawsuits, you may want to consider purchasing an umbrella liability policy or a high net worth insurance policy.

Myth #6: Your Home Insurance Policy Is Guaranteed to Cover the Full Cost of Rebuilding Your Home

Even if you opt for replacement cost coverage, your homeowners insurance policy won’t necessarily cover the full cost of replacing your home if it’s a total loss. For instance, you might have your home insured at $300,000. But if construction costs bring the total replacement cost to $375,000, your regular replacement cost coverage will still only cover up to $300,000.

However, if you purchase guaranteed replacement cost coverage, you don’t have to worry about coverage gaps. While you’d pay a higher premium for this coverage, you’ll potentially save money in the event that your home needs to be rebuilt.

If you have a high-value home (worth more than $1 million), standard homeowners insurance limits may not fully cover your rebuilding costs. In this case, it’s a good idea to purchase high-value home insurance.

Your home insurance also typically won’t cover flood or earthquake damage. If you live in a region prone to floods or earthquakes, you should look into purchasing additional coverage.

Myth #7: It Always Costs More to Insure Your Car When You’re a Senior Citizen

If you’re over 70, you may see your auto insurance premiums creep up, as insurance companies assess you as higher-risk. But older drivers can earn several types of discounts to help bring rates back down.

Drivers ages 55+ can take an accident prevention course, available through AAA or AARP. Completing these courses and others can lead to discounts — speak with your insurance agent to learn more.

If you’re retired or not employed full-time, you’re likely driving less. This can get you auto insurance discounts, too.

Myth #8: Your Credit Score Won’t Impact Your Insurance Rates

This isn’t true. In fact, many insurance companies take your credit score into consideration, because maintaining a good credit score demonstrates how well you manage your finances. If you want to get lower rates, maintain a good credit score.

Myth #9: If Someone Else Drives Your Vehicle, Their Auto Insurance Will Cover Damages

This is false. In most states, including Massachusetts, the insurance follows the vehicle, not the driver. This means that if someone else drives your car and gets into an accident, your insurance will pay for it unless they’re not found at fault, in which case the other party covers the damages.

Myth #10: People in the Military Pay More for Insurance

Because of risks associated with military service, some people in the military may see higher insurance rates from private companies for some insurance policies. However, many companies provide discounts for active duty, retired, and reserve service members and their families, so be sure to shop around.

If you’re being deployed, You can also opt for deployment storage plans to save on auto insurance if you won’t be using your vehicle for a period of time. Parking your vehicle on a military base can also earn you a 15% discount from some providers.

Learn More About Insurance With C&S

Don’t be fooled by common insurance myths. If you’re looking for the best advice or want to shop for new policies in New England, speak with an agent from C&S Insurance today.