Auto Insurance Mythbusters: 7 Auto Insurance Myths Debunked

I get it. The land of insurance is foggy, surrounded by murky waters we dare not tread. Thus, leaving rumors of what provokes the monstrous rates of auto policies that lie ahead of us. But how do we ride into the unknown territories to defeat the giant policy rates if we don’t know what’s fact and what’s fiction?

Here are 7 of the most common auto insurance myths, debunked:

Myth 1: Color determines the price of your auto insurance

We’ve all heard this one. If it’s a loud red, or a sporty orange, your auto insurance rates will skyrocket. Fortunately, that’s not true. There are several factors that go into determining your auto insurance rate, but color isn’t one of them. Your vehicle’s make, model, body type, engine size, age of the vehicle, as well as the age, driving record, and credit history of the driver. The insurance premiums also factor in the car’s sticker price, the cost to replace or repair if it’s damaged, its safety record, and the likelihood of theft.

For example, a 20-year old driving a Maserati will more than likely pay way more than a 35-year old driving a 2013 Honda Civic.

Myth 2: The older you are, the higher the insurance premium

Believe it or not – many drivers over the age of 55 (or 65 in some states) can qualify for a reduction in auto insurance rates if they successfully complete a Driver’s Education course approved by the Department of Motor Vehicles. Check out this list of approved driver’s education schools in Arizona to find a location near you. Don’t forget! Make sure that you get the certificate of completion to give to your insurance agent. You’ll need it to receive your discount.

Myth 3: Your credit bears no effect on your insurance rate

Wait – hold the phone. Credit score will affect your rate? Yes, in fact, it does. Industry experts have proven a correlation between credit history and insurance risk. Most insurance carriers will take your score into consideration when you want to purchase, change, or renew your auto insurance coverage.

It’s important to remember, however, that credit history is only one of several other factors considered when determining your premium. Though typically associated with negative effects on your premium, those with good credit could also be eligible for discounts.

Myth 4: Your insurance will cover you if your car is stolen, vandalized, or damaged by falling tree limbs, hail, flood, or fire

The type of coverage you select will dictate what your insurance will and won’t cover. By opting for comprehensive and collision coverage along with your standard liability policy, you’re ensuring protection against unfortunate circumstances beyond our control. Typically, if you’ve got an auto loan, your lender will require comprehensive and collision as a condition of your loan agreement.

However, if your vehicle is worth less than $1,000 (or less than 10 times the insurance premium), purchasing comprehensive and collision may not be the best use of your funds. But keep in mind that you need both collision and comprehensive in order to fully protect your vehicle from all damage – including the freak accidents.

Myth 5: You really only need the minimum amount of auto liability insurance required by law

Arizona requires you to purchase, at a minimum, liability insurance. Specifically, your policy must cover: $15,000 per person for bodily injury liability, $30,000 per accident when more than one person suffers injuries, and $10,000 for property damage.

Although at times you may want to opt for the minimum coverage because the premium is lower, it’s important to remember that buying the minimum coverage leaves you vulnerable for significant out-of-pocket expenses. Generally speaking, it’s recommended to have a minimum of $100,000 of bodily injury protection per person and $300,000 per accident.

Myth 6: If other people drive your car, their auto insurance will cover them in an accident

Arizona is an “at-fault” state, meaning the driver can elect to file a claim with the insurance agency of the person at fault for the accident, file a claim with their own insurance company, or go file a personal injury lawsuit in court seeking damages from the at-fault driver.

With this said, it’s usually okay for another driver to use your car on occasion. However, it’s important to understand that if they are in an accident they’re at fault for, the primary insurance on the vehicle will cover them. This means you’re going to be the one that needs to handle the claims, pay the deductible, and absorb any increased rates as a result. If the damages exceeds your insurance limits, then this is where the insurance of the person driving the vehicle would come in.

If someone else driving your vehicle is involved in an accident where the fault is placed on the other driver, the other driver’s insurance would take care of the damages and your insurance is unaffected.

Myth 7: Personal auto insurance covers both personal and business use of your car

A car is a car, regardless of how it’s used, right? Not necessarily. If you’re self-employed and using your car for business purposes, personal auto insurance may not be enough to protect you. If you’ve got a good driving record, you’ll be able to keep your auto insurance rates down. If you plan on allowing employees use your car, make sure they have a good driving history as well, or you’ll see your rates skyrocket.