5 Insurance Myths: Don't Get Fooled!

By Author: Marcus Stalder
Total Articles: 491
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Myth 1: Car Color Determines Rates

The idea behind this myth is that traffic and car crash agencies record not only the make, model, and year of a vehicle in an accident, but the color as well.

This is simply false. Color plays no role whatsoever. Some police may pull over red sports cars more than white sedans, but insurers don't factor it in.

Myth 2: Insurance for More Expensive Cars is Higher than Cheaper Cars

Sometimes this is true, sometimes it isn't. There are several factors that come into play here.
Firstly, insurers have to worry about replacing the vehicle if it is stolen or totaled. Because of this, expensive cars can be expensive to insure. However, secondly, insurers also factor in how often a car is stolen or totaled using detailed records. Expensive cars are usually not the most stolen or totaled!

Additionally, repair costs play a big role. Domestic luxury vehicles tend to be cheaper to repair than many mid-priced cars and trucks.
Lastly, safety is a top concern since one of the biggest expenses to an insurer is injury claims. If an expensive vehicle has proved to ...
... be much safer than other vehicles, it will be cheaper to insure. That's why the safety award winners are often very reasonable to get coverage on, no matter the sticker price.

Myth 3: Speeding Tickets Will Cause Big Rate Hikes

Insurance increases are based more on points than speeding tickets. If your ticket gives you a points increase, you will probably see an increase. However, most tickets will only bring about small increases in premiums. Speeding tickets, as long as they are in the 5-10 mph range, might not cause increases at all.

Myth 4: Property in my Car is Covered by my Car Insurance

Sorry, but unless you have something special on your insurance policy, you will not be able to file claims for personal items stolen from the vehicle or broken in a crash. Your laptop, cellphone, clothing, instruments - it should all be covered by your home insurance or renters insurance. Even then, check with your insurer to be certain.

Myth 5: I don't need separate policies for my business use and home use of a vehicle

It would be nice to just pay one policy for both, but if you use a vehicle for official business purposes, you are going to need a separate policy for that, unless you are an exceptional case.

Things that aren't covered by your personal policy include:

* Moving equipment
* Hauling supplies
* Transporting Clients
* Business trips

Wait, don't feel foiled by this just yet! If you are an independent contractor, you shouldn't need a separate policy. However, you won't be able to get special business coverage and you won't be able to write it off your taxes easily.

Bonus Myth: Auto Insurance Quotes Aren't Useful

Totally untrue! Auto insurance quotes give you very accurate estimates of what the top insurance companies around will charge you for your desired coverage. However, those estimates are only as accurate as the information you provide.
Comparing auto insurance quotes can and will save you money.