It’s true—auto insurance isn’t particularly intuitive. Here are some of the insurance myths you’ve probably heard, busted for your benefit.
1. Driving record is the only thing that determines my premium
Your driving record is certainly taken into consideration, but a whole array of factors influences your rate. These include the age and sex of the driver, the home address (rural vs. urban), the vehicle’s intended use, the size of the engine, claim frequency, and even your credit score.
2. If a friend borrows my car and gets in an accident, his insurance will cover it.
Traffic violations stay with a driver; insurance, however, stays with a particular car. If your friend causes an accident in your car, your liability insurance is the insurance that will pay out. Your friend’s insurance might kick in for medical expenses or if your insurance coverage maxes out, but there’s no guarantee.
3. The most expensive car to insure is a red sports car.
Go ahead, find the most outrageous paint job you can—it won’t drive up your premium a single cent. The expensive sports car myth is half true, because size matters. Smaller, zippier cars like a Scion tC tend to belong to younger, more risky drivers that accumulate more traffic violations. But a Corvette driven by a 50-year-old with a clean record and solid payment history would likely cost much less.
4. If I purchase the state minimum, my insurance will cover me if my car is stolen, has a tree fall on it, is vandalized, etc.
Too many people find out too late that the Virginia state minimum is only for liability—your car, your passengers, and the stuff within your car simply aren’t covered if that’s all you have. If you drive an older car that isn’t worth very much, the premium for comprehensive coverage might not be worth it to you. But if you drive a car that holds its value or a newer model, you’re carrying a big risk without the comprehensive coverage that can help repair and replace your vehicle.
5. Older vehicles are less expensive to insure than new vehicles.
Not always! Some makes and models hold their value better than others, and may cost just as much to insure as a new vehicle (think Honda vs. Kia). It also depends on what type of insurance you’re talking about. While a small sedan may not inflict as much damage on someone else (liability), it’s more likely to take a beating in an accident (collision/comprehensive).
6. Buying car insurance online and not using an agent will save me money.
Cutting out the middle man sounds like a good idea, right? And it certainly might save you money—until you make that inevitable claim. Most options to buy insurance online automatically quote the state minimum to save money on premiums, which could leave you underinsured and paying out of pocket later. An agent can make sure you get all possible discounts and a policy tailored to your actual needs.