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5 Common Car Insurance Myths, and the Truth Behind Them

September 3, 2012

There are a lot of car insurance myths floating around out there. Unfortunately, this causes confusion and difficulty for people simply trying to get the coverage they need at a price they can afford. These top five car insurance myths remain pervasive, despite the fact that they aren’t necessarily true. Get the facts on car insurance to make shopping and buying coverage simple and straightforward – and avoid omissions in your coverage.

Myth: You Don’t Need Comprehensive and Collision Coverage.

While these are in fact considered to be optional coverages, the truth is that they are not optional for everyone. If you lease or have a loan on your car your lender likely requires that you carry both of these options in order to protect their investment in your car. That means that for as long as you are paying off that loan on your car, they aren’t really optional for you. Your lender may even have a limit on how high the deductible can be so that they can be assured you will be able to cover it in the case of an at-fault accident or theft.

Myth: The Cheapest Premium is the Best Deal.

It’s easy to get wrapped up in finding the cheapest car insurance quotes. After all, it can be a very expensive thing to purchase. That doesn’t mean though that you are getting the best deal simply because you are paying the lowest price. Some car insurance companies may offer a policy that has fewer coverages or lower limits in order to arrive at a premium that is lower. It looks good on the surface, but it’s not necessarily the best value. The true great deal on car insurance is a policy that provides you with everything you need at a price you can afford.

Myth: All Tickets Raise Your Rates.

While a wide variety of traffic violations do have an impact on your insurance rates, not every ticket will hurt you. Parking tickets, for example are not generally chargeable on your insurance. Each insurance company determines for itself which tickets it will charge for and which it won’t, but you can count on things like speeding, running a red light, and careless driving to hurt you. Bottom line: not all tickets result in a rate increase.

Myth: A New Insurance Company Won’t Charge For A Previous Accident.

If you had accident forgiveness coverage with the previous insurance company, a new company could still charge for the accident. Changing car insurance companies can save you money, but it won’t get you out of paying the increased premiums due to an accident where you were at fault.

Myth: Insurance Will Pay To Replace a Car that is Written Off.

Yes, insurance does provide a payout for a car that is a total loss, but that may not be the amount you owe on it or the amount you would need to replace it. Cars depreciate, and over time their value fades. Many people find themselves, at least briefly, upside down on a car if they didn’t have a large down payment or have a hefty interest rate on the loan. You car insurance policy won’t pay off your loan if it’s more than their calculated value for the car. People buying new cars should consider adding Waiver of Depreciation coverage to the car; this covers the new car for two years with extended coverage that guarantees the insurance company will replace it with a new car, rather than pay the depreciated amount.

Don’t let these common myths leave you with a problem on your hands that could hurt you financially. The truth about car insurance is easy to obtain, and the more people who know and share the truth, the fewer myths will continue to float around to confuse people. Know what you are buying with your car insurance policy – and what you aren’t – so there are no surprises.