There are many myths attached to the insurance industry, and we are here to bust those myths today.
1. Credit Scores don’t affect car insurance rates (Maybe)
Almost every state can use your credit score to determine your rates. In the three states where using credit scores is banned (California, Hawaii, and Massachusetts) they use credit based insurance scores to help determine risk. According to studies people with lower credit scores are more likely to be involved in accidents.
2. My insurance follows me to any other car I drive (Nope)
This is a pretty common one, You lend a friend your car and they are in an accident, you are most likely liable for damages. Insurance stays with the car not the driver.
3. Red Cars Cost More to Insure (no way)
Your rate is determined on many different things like year, make, model, body, engine. The color has nothing to do with what you pay every month.
4. If my car is totaled insurance has the total value of my car covered (only if you have gap insurance)
If you are in an accident where your car is totaled we will cover the actual cash value of your vehicle (value at the time of the accident). Gap insurance is there in order to pay off the remaining balance of your loan or lease.
5. After a claim your rates will go up (Maybe)
There are many factors involved in this decision like, the severity of the incident, your history, Customer loyalty, who is at fault.
6. A new car always cost more to insure (Not Always)
As we have said there are many things that are considered when determining a rate, make model and value are important here. If you have a mini van and a classic corvette your corvette could cost more than the brand new mini van, also if your car is a popular target for thieves you could end up with a higher premium.
7. A coverage lapse has no affect on future rates (Yes it does)
No matter the reason for the lapse you will probably be shocked when you decide to get coverage again. Wether you forgot to pay the bill, or you decided to restore the classic camaro you had been driving, a lapse is a lapse. Even for one day you are now considered at a higher risk than people who have continuous coverage.
There are many other myths tied to Insurance, but these are some of the big ones, hopefully we can put some of these to rest for good!