Like any industry, various myths surround insurance. Consequently, consumers of home, auto, and business insurance may have misconceptions regarding coverage and policies as well as how this industry operates.
Sometimes people misunderstand insurance because it can be complex. Remember, believing false information can prompt you to purchase unsuitable coverage, and this can be costly.
Therefore, it's imperative you differentiate between the truth and myths. Here's a list of myths associated with this industry.
1. I don't have much stuff, so renter's insurance isn't necessary
Numerous people think that renters insurance isn't necessary because they don't own much stuff. Go to your rental and take stock of all your possessions, including appliances, furniture, and clothing.
Once you do so, you'll be surprised at how much you could potentially lose in the event of a natural disaster, theft, or fire. Even if your items aren't very expensive, it's easier to recover when you have a renter's policy to compensate for losses.
2. Color determines the cost of vehicle insurance
Your car's color doesn't factor into your insurance costs. Rather, the price of your vehicle policy is dependent on various factors, for instance, car model, make, engine size, and the vehicle's age. Insurers consider the driver's age, driving record, and credit history at times.
3. If damage occurs to your vehicle in an accident, insurance will cover a rental vehicle
Rental reimbursement doesn't apply to an accident automatically. As an elective coverage, you must purchase it separately. A common misconception is that vehicle insurance covers the cost of a replacement rental vehicle automatically. In reality, you must choose this coverage and apply it to your vehicle policy.
4. It's best to purchase from a dedicated agent
Numerous consumers believe that the best way of obtaining a low rate is to buy insurance from a dedicated auto insurance agent who works for an insurance provider. The truth is that the more carriers you obtain a quote from, the higher the likelihood of obtaining a low rate.
If you desire to speak to a dedicated agent, ensure you speak with agents at numerous varied companies to secure the best rates.
When looking to purchase the cheapest and best auto policy, conduct comparison-shopping on your own or use an independent agent who deals with several highly ranked insurance companies.
5. Only rich persons require umbrella insurance
Numerous people think that umbrella coverage is just for wealthy persons because it gives considerable coverage (typically more than $ 1 million) for liability proceedings. This product adds extra liability coverage to current policies, for instance, home or auto coverage.
Actually, anybody can go through a liability lawsuit, though not everybody has sufficient insurance to pay for one. If you're legally accountable for somebody's losses, death, or injuries, there's a likelihood you could face a lawsuit for more money than a typical policy will cover.
Bear in mind that umbrella coverage is a cushion everybody can use to get peace of mind in a worst-case scenario. Vehicle insurance protects anything stolen inside your vehicle and your policy may cover repairs and damages to your car because of the break-in.
However, if somebody steals your costly cargo or anything valuable in your car, your policy won't cover that. Nevertheless, if you have a homeowner's policy or renter's insurance, it may cover your losses, so ensure you contact your insurer.
6. It's more costly to insure your vehicle when you're older
It's quite the opposite. Actually, older drivers may qualify for special discounts. For instance, those aged over 55 years can obtain a reduction in their premium if they complete an accident prevention program successfully. Retirees may also qualify for an auto insurance discount.
Beware that older driver discounts and programs differ by the insurance carrier and state, so if you think you're eligible, verify with your insurance expert.
Various myths have perpetuated the insurance industry over the years, resulting in misconceptions. To protect yourself fully against life's unforeseen surprises, be informed on the myths and truths surrounding insurance.