Car insurance is an essential element of being a responsible driver, yet understanding all its rules and regulations may be challenging. Here, we differentiate myth from fact regarding car insurance to help you make informed decisions.
Contrary to popular belief, vehicle color does not have an effect on insurance rates. Instead, insurers focus on other aspects such as its make, model and year as well as safety features like airbags.
1. Red Cars Are More Expensive to Insure
Age, driving record and location all play an integral role in car insurance rates; but contrary to popular belief, red cars don’t cost more to insure than others.
Red cars may stand out more to law enforcement officers, leading some people to think that they get stopped more frequently. But this does not indicate that drivers of red cars are riskier or more likely to receive tickets than their counterparts.
Your car insurance rate largely depends on whether or not you’ve had traffic tickets or accidents and what type of coverage you select. Location and driving mileage also play a role; both are key components in calculating premiums; other considerations, like credit scores or make/model of cars aren’t taken into account, making comparison quotes necessary before choosing your next car.
2. Older Drivers Pay More
Age does play a factor when it comes to car insurance rates; however, multiple other elements also influence your policy premium. Your driving record, zip code and type of car all play an important role.
Teen drivers tend to pay the highest car insurance premiums due to their inexperience. However, as soon as they gain more experience behind the wheel their rate can significantly drop.
Men and women pay different amounts for car insurance policies due to a variety of factors. Gender, age and driving history all play a role, as do lower rates among women due to less traffic violations and accidents committed than men. This trend becomes even more noticeable once men turn 50 but narrows again post-50 until reaching 75 when it begins increasing again.
3. Your Credit Score Affects Your Rates
Your three-digit creditworthiness score can have an enormous impact on mortgage rates, personal loans and even car insurance premiums – some estimates even put this number as high as over $1,301 extra annually in premiums if your score falls short of satisfactory levels compared to having excellent credit.
Allstate, Geico and Nationwide car insurers utilize an individual’s credit history when setting their insurance rate. This data helps calculate a credit-based insurance score which takes into account factors like payment of bills on time as well as how much debt an individual carries in relation to available credit.
Some states, like California, Hawaii and Massachusetts, prohibit or restrict how insurers utilize an individual’s credit to determine rates. No matter your state’s regulations, however, you can improve your score by paying your bills on time and keeping debt utilization to an absolute minimum – then shopping around to find a company offering suitable rates based on your situation.
4. Your Friend’s Car Will Be Covered
Understanding myths versus facts when it comes to car insurance is crucial in making informed decisions and having adequate protection should an accident arise. We’ve debunked some of the more popular myths to help you separate fact from fiction.
If you lend your car to someone and they cause an accident, your liability coverage should cover damages to the other vehicle and any medical costs. Once your coverage limits are exhausted, non-owner policies of those you lend it to could take over to cover any remaining amounts – this is why it’s always advisable for the person you lend it to to purchase non-owner auto insurance if possible.
Before agreeing to lend someone your car, it is advisable to review your policy to understand how lending it works, especially in states with driver exclusion requirements. A single accident could have lasting repercussions for all involved, so it is wise to be informed before agreeing to lend someone your vehicle.