Media post: 5 Auto Insurance Myths

According to a recent survey of 1,000 adults, most Americans have only a basic understanding of how automobile insurance works. And, many drivers have bought into many of the myths that float around. In this article, we will look at five of the more common myths.

Myth 1: If your car is totaled, your Insurer pays you for the value of your car after the crash

Half of the respondents thought that that their insurer pays you what your car was worth before the crash. The others believe their insurer pays only the post-crash value of the car.

Reality: Auto insurers pay the market value of your car before the crash. Note that some policies now offer new-car replacement.

Myth 2: Red cars cost more to insure

This is sort of a funny one but a lot of people believe it to be true. According to a study executed by the Princeton Survey, almost half (44 percent) of study respondents thought that the color of a car affects the cost of insurance.  The worst being red cars!

Reality: The color of the car you drive doesn’t affect what your insurance costs. Yes, your insurance agent will ask you the color of your car but that is just for documentation purposes.

Myth 3: Your car insurance doesn’t cover you if you caused a crash

This is a common misconception. 37 percent of respondents thought that they wouldn’t be covered if they had caused an accident. The answer to the issue: it depends if you have liability coverage only or comprehensive coverage.

Reality: Liability insurance, required for driving in nearly every state, covers damage you cause to someone else’s car (or other property) when you’re at fault in an accident. Full collision insurance, which is optional, covers damage to your own car too, even if the accident was your fault.

Myth 4: Your auto insurer pays for routine mechanical repairs

According to the folks at Barkau Automotive (Stockton, IL) many of the people they deal with don’t know that auto insurance doesn’t cover mechanical problems. They thought it covered “everything.”

Reality: Car insurance doesn’t cover any mechanical problems with your car, unless they’re directly related to an accident.

Myth 5: Car insurance covers belongings stolen from a car

About 50% of the people surveyed thought their standard car insurance covered items stolen from your car.

Reality: Your car insurance doesn’t cover the contents of your car against theft. This coverage comes from your renters or home owners insurance as long as whatever is stolen is worth more than the deductible.