Purchasing auto insurance can be confusing, especially for first-time buyers. To compound matters, well-meaning friends and family members sometimes dispense outdated or untrue advice about car insurance.
In order to make purchasing auto insurance less daunting, and to avoid making costly insurance mistakes, it’s important to look at the facts.
The following are three common auto insurance myths and the truth behind them.
Myth #1. Red cars cost more to insure.
Some people say that red cars are more expensive to insure because their drivers are typically more aggressive on the road. However, there is no data to back this up and insurance providers agree. Insurance providers do not base the amount of their premiums on the color of a vehicle. What they do base car insurance rates on are the make, model, and type of vehicle, as well as its list price and the year it was made. Other factors insurance providers base their rates on are driving, claims, and credit history.
Myth #2. Minimum coverage is all that’s needed.
Each state requires a minimum amount of insurance coverage from drivers. While this is better than no insurance at all, the bare minimum might not provide enough protection in the event of an accident. Many car accidents exceed the limits of minimum coverage. If this happens, the injured party can seek damages from the driver until the debt is paid.
Optional collision insurance covers damages from auto accidents, while comprehensive insurance covers damage not resulting from collisions, such as falling branches and vandalism, and replacement if the car is stolen.
Myth #3. Women get into more accidents, therefore they pay higher premiums.
Despite the negative stereotypes, women are statistically safer drivers than men. According to the Insurance Institute for Highway Safety, car crashes with male drivers were typically more severe than those involving female drivers, while the National Association of Insurance Commissioners reports that men are 10 percent less likely than women to wear seatbelts, increasing their risk for serious medical injuries that insurance providers will have to cover.
As a result, insurance providers consider gender a factor in calculating the amount of premiums. The difference between the amount of premiums paid by male and female drivers will decrease as men age, however, and insurance providers also take into account driving record and claims history when deciding rates.