Understanding all the legal mumbo-jumbo of an insurance policy is hard enough. So auto policy holders should know what's fact and what's fiction about what insurers look for when determining premium rates. Here are 10 auto insurance myths debunked.
1. The color of my car matters.
Red cars may be a hot ticket item, but they do not drive premium prices up as is widely believed. Car insurers are more interested in the make and model, year, body style, engine size and, in some areas, location (street parking versus driveway/garage-kept vehicles, for instance). What does count, however, is drivers' behavior. Moving violations, like speeding or reckless driving that result in "points", certainly affect the cost of premiums no matter what color the vehicle happens to be. You may care what color your car is, but insurance companies don't.
2. My old car won't be a target for theft.
Wrong. According to a National Insurance Crime Bureau report, car thieves preferred older models because they are easier to steal. In fact, a 2007 bureau report that listed the most stolen vehicles included a 1995 Honda Civic, a 1991 Honda Accord and a 1989 Toyota Camry.
The insurance bureau's report also suggests that thieves' preference varies from state to state. Crooks in Texas grab trucks, while thieves in California prefer Hondas, Toyotas and other imported models.
3. I'm covered if my car is stolen, vandalized or damaged by hail, wind, fire or flood.
Comprehensive and collision coverage are optional when purchasing an insurance policy. So it's not an "automatic" if a tree limb smashes your windshield or vandals spray-paint graffiti on your door. Comprehensive and collision riders are usually required if you're leasing or financing your vehicle; but once the car is yours, you must request this additional coverage.
4. Credit scores don't affect insurance rates.
Most car insurers take a lot of factors into consideration when determining your premium rates. Since your credit score is an indication of how well you manage your financial affairs, many companies look at this number if you want to purchase, renew or change an insurance policy. (Credit is one factor that may affect your rate.)
5. My insurance company can cancel my policy at any time.
Unless you give them an adequate reason to do so, car insurers can't arbitrarily cancel a policy in the middle of a term. Grounds for cancellation may include fraud or non-payment of premiums.
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