Car insurance is one of those things that you only think about when you need it. Since it’s often out of mind until a mishap happens, many people often have misconceptions about what it can and can’t do for them. Below are just some myths about auto insurance that need to be dispelled today.
My credit rating has nothing to do with my insurance rates
You already know that your credit rating plays a role in your mortgage rates, but did you know that it can also affect your car insurance policy? According to the Insurance Information Institute, your credit rating gives an indication of how well you manage your finances. The higher it is, the more likely that you will pay your premiums on time, and the more attractive options the rate insurers will give you.
Insurance rates get more expensive the older you get
It seems that people are conflating medical insurance rates with auto insurance. In reality, however, older drivers are actually cheaper to insure because they have more experience on the road. Thanks to this experience, insurers think you are less likely to be involved in an accident, which is why drivers in their 40s and 50s often get lower rates.
If you don’t report an accident, your premium won’t rise
Hey, if you don’t report the accident, your insurer can’t jack up your rates, right? Wrong! This will only happen if the other driver also decides not to inform his insurer. More likely than not, however, this person will indeed contact his insurance company, and it won’t be long before you hear from yours, too. Sneaky behavior like this make you seem like a high-risk individual, which is why they might increase your premiums come policy renewal time.
Your insurer will pay off your car loan if the vehicle is totaled
The worst thing that can happen to your car during an accident is total wreckage—and things get even more complicated if you haven’t paid it off yet. Some people think, though, that their car insurance policy will serve as their knight in shining armor.
The truth, however, is that your insurer will only pay you the fair market value of your vehicle, which is its original amount less depreciation. If you’re concerned about this, get Guaranteed Auto Protection (GAP) on top of your policy.
When you’re getting a policy, be sure to clarify any misconceptions with your car insurance broker and learn if you’re getting the best deal. The more you know about car insurance policies, the better the decisions you can make.
Eight Auto Insurance Myths, III.org
Six Common Car Insurance Myths, DMV.org