Debunking 6 Car Insurance Myths

In some countries, car insurance is mandatory and without proper policy, our wallets will be significantly affected; due to high premiums or costs related to uninsured cars and drivers. Even so, the car insurance industry is still surrounded with multiple myths:

1. By going for the lowest quote, we will save money: When we purchase car insurance, we essentially buy peace of mind. We will have an assurance that accident won’t severely degrade our lifetime savings. Instead of choosing the lowest quote, we should prioritize insurers that we can trust most. The insurer should have solid reputation and it means that they will fulfil claim as stated in the policy. Fly-by-night, obscure insurance companies will certainly give us the cheapest quote possible, but it is often a bad idea. If our claim is rejected all the car repair, medical costs and other liability expenses will have to come from our own pocket.
2. Minimum liability is enough: This may be true or not true. Minimum liability is essentially the level of coverage that we need in order to legally drive our car. However, we will need a more complete coverage if we want to be better protected during an accident. The level of minimum liability can vary from state to state. We should also be aware that some accident scenarios won’t be covered by a minimum liability. As an example, minimum liability may cover only damage to others’ cars, but not damages in our cars. This can be a bad thing if the accident is at our fault.
3. Red cars are more expensive to insure: Red cars are associated with expensive, sports cars. However, the color of our car has no real bearing on the actual insurance rates. The condition, make, model and year of the car define the insurance rates, not its color.
4. Old, rusty cars are more affordable to insure: In fact, old cars will need to be maintained more often and many of its parts will need to be replaced, compared to newer cars. Old cars may also have fewer security and safety features. The best car insurance rates can be obtained from second-hand cars that are no older than 4 years.
5. Our policies can be cancelled by the insurer for any reason whatsoever and at any given moment: It’s not true. The insurer is allowed to cancel the policy only under certain condition. Policy is often cancelled only on grounds of fraud or non-payment. If the insurer wants to cancel the policy for any kind of reason, the customer should be given the 3-day notice, before the term ends. Consumers may believe that the cancellation is unfair. In this case, the complaint could be directed to the local insurance commissioner.
6. Credit scores are not a factor in the insurance industry: In reality, credit scores have an effect on our insurance rates. Insurers determine our credibility and financial reliability by evaluating many things, including our credit scores. By making sure that we have healthy credit records, we will be able to obtain lower rates, because insurers don’t see us as risky consumers.