No matter how long you have been a car-owner, auto insurance always seems to remain a grey area. There are so many auto insurance myths, being passed off as common wisdom, that it is hard not believe they actually exist. To make things even more confusing, insurance companies change the fine points on policies all the time, and no matter how inclusive your own policy is, you rarely know the loopholes until you’ve had car trouble and are now expecting your auto insurancecarrier to keep their side of the bargain.
To bring some clarity into the situation, we’re busting 8 auto insurance myths right here on this page, so at least you know these popularly held ideas are not true!
# 1: Raise Your Deductable And You’ll Save A Lot Of Money
Don’t take this piece of wisdom at face value because everybody’s situation is different. Raising the deductible does indeed mean that you will pay less forinsurance – but this route is only safe for people who have enough savings stashed away. In case you do get into an accident and have to pay out-of-pocket for the bulk of the costs, you have to know that you can do it on your own. This is a bit of a gamble, and only you can tell if a higher deductable is actually a smart idea for you.
# 2: Don’t Bundle All Your Insurance Policies With One Company
Since insurance companies are not all made equal, a lot of people want to hedge their bets by spreading their insurance portfolio out. Bundling however – getting your homeowners insurance, for example, from the same company that does yourauto – can mean a price break for you. Insurance carriers want to keep customers within their fold and be their single insurer, and so many offer discounts if you’re buying multiple policies from them. Look into that and see how the numbers stack up.
# 3: As Long As You Have Personal Auto Insurance, It Does Not Matter If You Use The Car For Business Purposes
Big mistake, as a lot of early Uber and Lyft drivers have already found out to their cost. Even if you’re self-employed and work for yourself, your personal insurancewill not come to the rescue if the vehicle gets into an accident while being used for your business. You need a business vehicle insurance. Also, make sure to check driving records if you’re allowing your employees to use that vehicle for business use.
# 4: You Have To Pay More Auto Insurance Than Civilians, If You’re In The Military
Quite untrue. In fact, if you shop around, you will find that your military credentials can get you a discount. Some insurance companies even discount policies for ex-military people and their families. Don’t lose this advantage if you qualify, by not going after it.
# 5: If You Have The Minimum Auto Liability Insurance, You’re Okay
The law states that you have to get a minimum amount of auto liability coverage if you’re driving on American roads. But that is not an adequate safety net because you cannot predict what will go wrong with your vehicle or when you might get into an accident. The out-of-pocket cost of repair and other related expenditure can ruin your financial solvency if you think you can skate by with minimum coverage and save money that way. The recommended minimum is $ 300,000 for accidents and $ 100,000 for bodily injury protection.
# 6: If Another Person Gets Into An Accident While Driving Your Car, Their Own Insurance Will Save The Day
It won’t. In most states, the primary insurance carrier who is covering your vehicle will have to pay. Your friend’s insurance company is not expected to do anything if the vehicle is yours. It’s going to be entirely your problem.
# 7: Your Bad Credit Rating Will Not Affect How Much You Have To Pay ForAuto Insurance
Auto insurance companies don’t know you personally, and they will certainly be interested to know if you are in the habit of making responsible financial decisions. Credit scores are a good benchmark that helps them ballpark their prediction on how often you’re likely to be filing a claim. So your `credit-basedinsurance score’ is a definitely a guiding factor in how much you will have to pay for your car insurance.
# 8: Auto Insurance Is More Expensive For Older People
It is not. In fact, those over 55 years of age can qualify for a discount on theirinsurance premium if they pass an approved accident prevention course for senior drivers. If you are retired, insurance companies assume you will not be driving around as much as you did before, and that often gets you a break on price as well. Make sure to check whether you qualify for a reduced premium on account of your age, and take full advantage of it!