Common Misconceptions New Car Owners Have About Car Insurance

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With the avalanche of auto insurance misinformation out there, it can be difficult to separate fact from fiction. For example, maybe you’ve heard that women tend to pay more for car insurance, or vice-versa. But is there evidence behind such claims? Keep reading to find out the facts about common car insurance myths and misconceptions.

Common Misconceptions New Car Owners Have About Car Insurance

All Auto Insurance Policies Include the Same Basic Coverage

Contrary to this common misconception, auto insurance policies can significantly vary in the coverage types they provide. One source of such variation is the discrepancies between state laws. Some states require specific forms of coverage and have unique minimum coverage requirements for each required auto insurance form.

Typically, a car insurance package includes a combination of the following coverage forms:

  • Bodily Injury Liability – If you cause a car accident that injures another driver or their passengers, this policy helps pay for their medical costs. In most states, you can’t legally drive without this insurance, and each state determines the minimum amount of liability coverage you should have.
  • Property Damage Liability – If you’re found at fault for an auto accident while covered by property damage liability insurance, you can avoid paying out-of-pocket for the repair or replacement of the other driver’s damaged vehicle or property. This cover is also mandatory in many states.
  • Medical Payments – If an auto accident injures you, another driver on your policy, or your passengers, medical payments coverage (also known as personal injury protection) will cover the associated medical expenses.
  • Collision – While property damage liability insurance covers damage to the other driver’s property, collision coverage helps pay for damage to your vehicle or replace it if necessary.
  • Comprehensive – If a covered event such as a fire, vandalism, or theft damages your vehicle, comprehensive coverage helps pay for car repairs or replacement.
  • Uninsured and Underinsured Motorist – This coverage comes to the rescue when the at-fault driver is uninsured, doesn’t have sufficient liability coverage, or is unavailable to pay for all your accident injury losses and damages.

My Accident Record Is the Primary Factor That Determines My Rate

Insurance companies can use a wide range of factors to determine your rate, so it’s impossible to say whether your accident record is the ultimate determining factor. Other possible factors influencing your auto insurance premiums include:

  • Mileage – The longer you drive, the higher your accident risk exposure is, often translating to higher premiums.
  • Location – Driving in high-risk areas (due to theft, vandalism, or accidents) exposes you to a higher rate.
  • Age –  Statistics show that drivers aged 65 years and above face a greater risk of fatality or severe injury in an auto accident. As a result, this demographic pays higher rates for car insurance. In contrast, drivers aged between 50 and 60 tend to qualify for insurance discounts and generally pay less for coverage.
  • Car Type – Your insurer will look at how much it may cost to repair or replace the type of car you drive after auto accident damage or theft.
  • Your Credit – Data shows that people with lower credit scores are more likely to file an auto insurance claim. The likelihood of you filing an auto accident claim and the potential settlement amount can directly influence your insurance rate.
  • Gender – Who causes more car accidents, men or women? Who gets into more accidents, regardless of fault? The jury’s still out on these questions. But regardless of the answers, insurance companies are allowed to use gender as a determining factor when calculating rates in certain states.

If I’m Not at Fault for an Accident, It Won’t Go on My Record

Whether you live in a no-fault or fault state—and regardless of if you caused it or not—a reported accident will still go on your driving record. However, it won’t necessarily raise your insurance rate, depending on your circumstances and your provider. How long an accident remains on your record depends on your insurance provider and your state’s laws.

Car Insurance Follows the Driver

Auto insurance tracks your car, not the driver. That’s why your insurer may be liable for an accident claim involving your car with somebody else behind the wheels. As a result, the claim appears on your insurance record, and it might impact your auto insurance costs.

When in Doubt, Ask Questions

When researching your auto insurance options, it doesn’t hurt to work with an experienced agent that can answer your questions about state requirements, coverage forms, and how premiums are calculated. If you aren’t sure how part of the insurance process works—ask, don’t fall prey to misconceptions and misinformation.

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