8 Auto Insurance Myths & Realities

Insurance rates, as a whole, are based on three key elements: your driving record, choice of car and location. However, there are many facts, tips and information you need to know if you’re committed to finding cheap auto insurance.

First of all, you need to understand how car insurance works. The BuyingAdvice team put together a checklist of facts and fiction to test your auto insurance knowledge. So, what do you think, is it a car insurance myth or reality?

1. Cheaper cars cost less to insure – Myth. Although it is true that more expensive cars pay higher rates because they are more expensive to replace, cheaper small cars aren’t as safe, so they pose a bigger risk. The more safety features you add to a new car (which also raises its price), actually lowers your insurance rates.

2. Comprehensive coverage insurance protects you in all situations – Myth. It is only one type of insurance and it just covers damage caused in events other than collisions, such as fire, theft, vandalism and weather-related incidents. It does not cover contents of a car, tires or any part of the vehicle damaged by a mechanical breakdown, rust or an explosion within the combustion chamber.

3. Car insurance for young drivers is more expensive – Reality. Statistically, young drivers have more accidents, so car insurance companies usually charge higher rates to drivers under 25. However, if you have a lousy driving record, there’s no chance you’ll score any savings regardless of your age.

4. Buying different types of insurance from the same car insurance company saves you money – Myth. Although it may be true in some cases, as a general rule it doesn’t give you cheap auto insurance by default. Sometimes brokers may be able to get you better deals from competing companies.

5. Car insurance for women is cheaper – Reality. Women tend to be safer drivers, however, age is also a factor. Men and women may pay the same insurance rates after age 30.

6. Red cars are more expensive to insure – Myth. Insurance companies don’t ask what the color of your car is when giving you a quote and your VIN doesn’t give that information. Color doesn’t factor in at all.

7. Residents of big cities pay more for car insurance – Reality. In bigger cities you have more chances of your car getting stolen. Driving conditions and the number of drivers around also affect your premiums. The most expensive cities to purchase auto insurance in are New York, Los Angeles, Philadelphia, Chicago, Miami, New Jersey and Massachusetts.

8. Speeding tickets affect my rate – Partly true. If you’ve only had one ticket in your entire life or if it’s been more than ten years, then, as far as the insurance company is concerned, it’s long forgotten. You’re entitled to one mistake. However, if you get pulled over for speeding more than twice, then yes.

Know that you know the truth (and myths) behind car insurance rates, you can make an informed decision on what car to buy and how it will affect your insurance rates. If you want to learn how they are determined, read “16 Details That Will Help You Find Inexpensive Auto Insurance“.

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