According to the NHTSA, there are almost 17,000 car accidents in the US every day. That means almost 17,000 insurance claims are happening every day. Even with auto insurance being such widespread activity, used by millions of people, there are still many things that people are unaware of. From absurd myths to unbelievable facts, there are a lot of things to know about car insurance. This article will look at all those myths, facts, and more about auto insurance.
No Colorism in Car Insurance
The first one on this list is an absurd myth going around and it is surprising to see how many people believe it. The myth is that red cars cost more to insure than white cars. This is purely false. There is no law in any part of the US (and probably in the world) that states your auto insurance rates depend on the color of your car.
Since the color red is associated with danger, speed, and other things that insurance companies do not like. White is associated with peace, so white cars will cost less to insure. This is completely false. Color does not matter in deciding auto insurance rates, but your driving record and other factors do. So if you have been wanting to get that red car but were scared of the insurance rates, don’t worry, go get that car.
Your Credit Score Matters
Yes, your credit score affects your insurance rates, even though it sounds absurd. Some states such as California have banned this practice, as it further creates the socio-economic gap, most of the states still use the credit score in deciding your auto insurance rates.
People with a poor credit score are more likely to miss out on insurance premium payments. To offset this risk of missed premium payments, insurance companies charge higher rates for premiums to people with a poor credit score. People with good credit scores get to pay less in insurance premiums. It sounds unfair, and it is unfair. But that’s the way it is for now.
No-Fault Does Not Mean It’s Not Your Fault
Twelve states in the US are called the No-Fault States. This does not mean that if you cause an accident, it will be considered “not your fault”. No-fault states require you to carry a personal injury protection plan. So in the case of an accident, you don’t have to rely on the other driver’s liability insurance to pay for the medical bills. That’s what “no-fault” means. Irrespective of whose fault the accident is, you have to carry a personal injury protection plan.
You Cannot Use Personal Auto Insurance for Business Use
So you got yourself a nice auto insurance policy with a great coverage limit. But don’t you think that you can use your car for business use and expect the insurance company to pay for the repairs if your car gets in a wreck. There are separate insurance policies for personal and business uses. And the insurance company can even drop you off if they find you’ve been using your car for running a business.
For example, people who work for rideshare companies such as Uber or Lyft cannot use their insurance if they get in an accident while driving during business hours. There are rideshare insurance policies that work like hybrid insurance, switching to personal insurance during non-business hours.
Minimum Coverage Limit is Enough
Every state has its minimum coverage limit for liability insurance. This is the amount your auto insurance company must pay in the case of an accident. What many people assume is that getting the liability coverage with the minimum coverage limit is enough. While it will be enough for you to legally drive the car, the problem comes when there is an accident and the cost of repairs and medical treatments exceeds your coverage limit.
Almost in every accident, the cost of repairs and medical treatments will always be higher than the state’s minimum limit. If you are caught in an accident that is your fault, and your liability insurance is not enough to cover the damages, then be ready to be sued, and pay a lot from your pockets. This is why it is advised to always have a higher coverage limit than the state’s minimum limit.
Stick with One Insurance Company
While it is better to stick with one insurance company for a long period. It gets you no-claim bonuses, accident forgiveness, and other perks. But it is not always better to stick with one insurance company. If you have no perks or bonuses, it is better to make a switch.
The internet’s power allows you to look for great and affordable car insurance companies that might be offering better coverage at a cheaper price. So why stay with the same company and pay more?
Making Your Car Secure Will Reduce Insurance Premium
The only reason auto insurance companies charge more to some people while less to others is all because of risk. Wherever the company sees more risk, they charge more to offset it. So you can save some money by reducing this risk and ensuring your insurance company that your car is secure.
For example, getting a car with safety features such as higher NCAP ratings, ABS, ESP, and other technology that either reduces the risk of damage or cost of damage will get your insurance rates low. Another great way of reducing auto insurance rates is by installing anti-theft locks. So make your car as secure as possible and save some dollars!