Debunking the Top 5 Auto Insurance Myths You Need to Know

Auto insurance can be confusing. Many car owners believe things about coverage, costs, and claims that simply aren’t true. These auto insurance myths can lead to poor decisions, wasted money, or even being underinsured when it matters most. It’s time to stop believing car insurance myths and get clear facts that help you protect your vehicle and wallet.

Let’s explore the top 5 auto insurance myths and debunk insurance misunderstandings that could be costing you.

Myth 1: Red Cars Always Cost More to Insure

Many people think that having a red car means higher insurance premiums. This myth is so common that it’s almost accepted as fact. But color does not affect your insurance rates.

Insurance companies base premiums on risk factors like your driving record, car model, age, location, and how much you drive. The paint color simply doesn’t impact the chance of accidents or theft.

For example, a 2023 study by the Insurance Information Institute found no correlation between car color and insurance costs. So if you love a red car, don’t worry about paying more just because of its color.

Myth 2: Your Credit Score Doesn’t Affect Your Auto Insurance

Some drivers believe their credit score has no impact on their insurance rates. This is false in many states where insurers use credit-based insurance scores to help determine premiums.

A better credit score often means lower rates because it suggests responsible financial behavior. On the other hand, a poor credit score can lead to higher premiums.

If you want to lower your insurance costs, improving your credit score can be a smart move. Check your credit report regularly and fix any errors to avoid paying more than necessary.

Myth 3: You Only Need Liability Coverage If You Have an Older Car

Liability coverage pays for damage or injuries you cause to others in an accident. Some drivers think it’s enough to have just liability if their car is old or low in value.

While liability is required by law in most states, it doesn’t cover damage to your own vehicle. If you have an accident or your car is stolen, you’ll pay out of pocket for repairs or replacement without comprehensive or collision coverage.

For example, if your 10-year-old car is totaled in a crash, liability coverage won’t help you buy a new one. Depending on your situation, having full coverage might be worth the extra cost to avoid large expenses later.

Myth 4: Filing a Claim Will Always Raise Your Premiums

Many drivers avoid filing claims because they fear their insurance rates will skyrocket. While claims can affect premiums, it’s not automatic or always significant.

Insurance companies consider the type of claim, your history, and fault. For example, a small comprehensive claim like a windshield repair might not increase your premium at all.

In some cases, paying out of pocket for minor damage can be more expensive than filing a claim. It’s best to ask your insurer how a claim might impact your rates before deciding.

Myth 5: Shopping for New Insurance Means You Lose Your No-Claims Discount

Some car owners believe switching insurance companies means losing any discounts earned for safe driving. This is not true.

Most insurers allow you to transfer your no-claims discount or proof of claim-free years to a new policy. You just need to provide documentation from your previous insurer.

Switching companies can save you money if you find better coverage or rates. Don’t let this myth stop you from shopping around and finding a policy that fits your needs.

What You Can Do Next

Understanding the truth behind these auto insurance myths helps you make smarter choices. Review your current policy and coverage to see if you’re paying for what you really need.

Talk to your insurance agent about discounts, coverage options, and how your personal factors affect rates. Use online tools to compare quotes from different companies.

By stopping believing car insurance myths, you gain control over your coverage and costs. Protect your vehicle with confidence and avoid surprises when you need your insurance most.