Common Insurance Misunderstandings

Red cars cost more to insure.

False. Insurance agencies don’t even ask or look at the color of your vehicle when calculating your insurance premium rate.

Cheap cars cost less to insure.

False. When calculating insurance premiums, agencies ask for the make, model, year, body type, engine size and year of your vehicle. You could have a 20-year-old car with a V8 engine that costs more to insure than a 5-year-old car with a 4 cylinder engine. Often times collision is cheaper for older cars because their value is lower than those of newer cars.

If a friend borrows my car, they are liable for the accident; not me.

False. We wish that were true. Unfortunately you are ultimately held accountable for any accident caused by your vehicle regardless of who is driving. However, it is possible that the driver’s insurance would be responsible for some of the damages. If your insurance premium doesn’t cover all the expenses the next in line would be the driver’s to pick up the rest of the expenses.

Comprehensive coverage covers everything.

False. Comprehensive coverage pays only for damage caused by an event other than a collision including:

Fire
Theft
Vandalism
Weather
Collisions with animals
Glass

Not all scenarios, circumstances, and events are covered under comprehensive. If you have questions about your comprehensive coverage call your insurance provider.

Sports cars get more tickets, thus having higher rates.

False. Fun fact: topping the list with the most violations are coupes, sedans, and SUVs (according to a study by Quality Planning Corp). We don’t use this study to calculate your premium; however, we do look at the vehicle loss history as well as your driving history to determine your policy premium.

Insurance agencies can charge whatever they want.

False. States have set up regulations to help consumers get “fair” prices. Insurance agencies are required by their respective states to show how they calculate their insurance premiums. All rates are filed with the Department of Insurance.

My personal property inside my vehicle is automatically covered.

False. Comprehensive and Collision coverage must be purchased within your policy, and some companies will cover up to $200. Most won’t cover your personal items, though. This is where renter’s or home owner’s insurance comes in. Your comprehensive coverage will cover any items that are stolen or damaged due to fire, vandalism, hail, and earthquakes. However, you are required to pay your deductible to receive the value of the items damaged.

I need to buy additional coverage for a rental car.

My credit score doesn’t affect my rate.

False. This is state specific, but most states will use an ‘insurance score’ based on your credit to determine costs. Your credit score is indicative of how well you pay your monthly payments. The lower the score the higher the premium because most agencies consider it a risk. California, though, does not use credit as a factor for auto insurance.