Demystifying The Car Insurance Market

Your vehicle is an important financial asset that can potentially offer numerous benefits. However, you must invest in insurance to safeguard the associated benefits.

When looking for insurance, beware that there’s considerable perceptions and information concerning this industry. While some are fundamental truths, others are simply myths. It’s important you learn to differentiate the two because myths can cost you money. Here are some common myths you should spot.

Color determines Insurance Cost

Most consumers mistakenly believe that red cars are more costly to insure than other colors. Your vehicle’s color doesn’t affect your insurance premium. Factors such as the car’s model, age, and body size are what determine your premium.

In fact, insurers never ask for vehicle color when offering quotes. Premiums are also partly dependent on the vehicle’s sticker price, the overall safety record, and repair cost.

You Can Prevent Increasing Rates if You Don’t Report an Accident

A number of drivers think that they can prevent insurers from finding out about an accident, allowing them to maintain their rates. The truth is, if you’re involved in an accident with another driver, he or she may file a claim for injuries or damages.

In the event that this happens, it’s only a matter of time before the injured party’s insurer files a claim against you and your insurer. Once this occurs, it’s likely you’ll face an increase in premiums.

Furthermore, if you obtained a ticket due to the accident, it can emerge on your record, resulting in the increase of premiums.

Insurance is more Costly for Older Drivers

It’s quite the opposite. In fact, numerous drivers over 55 years can qualify for a reduction in insurance rates if they complete a course of accident prevention successfully. The course is accessible through state and local agencies as well as through the AARP and AAA.

Insurance companies will typically give up to a 10% discount on vehicle insurance, but verify with your insurer before signing on. If you’re retired or aren’t employed full time, you may qualify for a discount of up to 5%. It’s important to note that age requirements for this kind of discount differ by insurance carrier and state.

Credit Scores don’t Influence Insurance Rates

Most vehicle insurers consider numerous factors when establishing your premiums. Remember, your credit score indicates how well you manage your monetary affairs. Therefore, numerous companies examine this figure if you wish to renew, purchase, or alter an insurance policy.

Your Insurer will cover you in the event of theft, vandalism or damage from hail, fire, or flood

As a consumer, you can opt for collision and comprehensive coverage together with your normal liability policy.

Lenders often expect drivers to purchase collision and comprehensive coverage as a prerequisite for a car loan. However, if a vehicle is less than $1,000 or less than 10 times the premium, buying the elective coverages may not be cost efficient.

Nevertheless, beware that you should purchase both comprehensive and collision coverage to protect your car fully from all kinds of damage.

Purchasing from a Committed Agent is Best

Some drivers believe that the best way to obtain a low rate is to buy insurance from a committed agent who works for an insurance firm. The truth is, the more companies you obtain quotes from, the higher the likelihood of obtaining a low rate.

If you want to speak with a committed agent, ensure you speak with agents from different companies to obtain the best rates.

If my friend borrows my car, his or her insurance will offer coverage in case of an accident

In most states, the policy covering the car is the primary insurance, which implies that the owner’s insurer must cover the damages irrespective of the driver at the time of the accident. Bear in mind that laws and policies vary by state, so ensure you understand the regulations before permitting somebody else to drive your vehicle.

Final Thoughts

When buying auto insurance, it’s important you distinguish between fiction and truth to avoid costly mistakes. If you don’t know where to start, this guide will debunk some common myths in this industry.

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