When searching for cheap car insurance, it pays to know the facts. Friends and co-workers may not be the most reliable sources for insurance information. Ten common myths are debunked below:
1. "No-fault insurance means it's not my fault!"
No-fault car insurance varies by state, but usually requires your auto insurance company to pay medical expenses and lost wages for injuries due to a car accident, regardless of who is at fault.
"After an accident, no-fault insurance lets all parties get payment for their immediate medical needs while their insurance companies are deciding amongst themselves which company is going to pay for the accident," says Michael Petrarca, an assistant vice president at Amica Mutual Insurance Co. in Lincoln, R.I.
If you caused the wreck, it doesn't mean you're off the hook. The insurance companies determine who's to blame, and that party (and their insurer) are responsible for property repairs and other damages, he says.
2. "The color of my car affects my insurance rate."
Auto insurance companies set rates based on the safety features of a vehicle and how much it costs to repair or replace the vehicle (among other factors about the driver). But the color of the car doesn't factor into the premium, says Petrarca.
"Some makes and models generate more claims than others, and they're rated accordingly, but the color of a vehicle means nothing," he says. Review Insurance.com's concise explanation of how auto insurance works.
3. "My friend borrowed my car, so he's responsible for damages."
"If you give someone permission to drive your car and that person crashes, it will be your insurance–not your friend's policy–that covers the damages," says Rebecca Doran, a senior corporate underwriter with Amica.
"For a personal auto policy, the insurance is generally going to follow the car, not the driver. So if I lend a vehicle to my brother, and he gets in an accident, it would go through my insurance company," she says.
However, if your auto insurance coverage is maxed out, umbrella insurance can be a financial life-saver.
4. "My auto insurance company can cancel my policy at any time."
State regulations prohibit insurance companies from dropping you in the middle of your policy term, unless the insurer has adequate grounds to do so, says Petrarca. Such grounds may include non-payment or fraud.
However, if you're paying your premiums on time and have a valid driver's license, you have little to worry about, he says.
"While there are reasons companies can cancel insurance policies, they can't necessarily do it at any time," he says.
5. "A more expensive car costs more to insure."
Car insurance companies look at the “loss history” of your vehicle–meaning how many claims they’ve paid on that model—along with how much it might cost to repair or replace your car, not its sales price, when determining how much to charge you for collision and comprehensive coverage.
In fact, some mid-priced vehicles may have higher insurance premiums if they have a high loss history and cost more to repair than expensive ones.
"A $30,000 sports car could have costlier claims than a $50,000 SUV, so the sports car could cost more to insure," says Sal Orso, an assistant vice president of casualty underwriting for Chartis Insurance's private client group in New York.
6. "I got a ticket, so my car insurance rates will skyrocket."
A ticket doesn't automatically mean an increase in rates, Doran says. In fact, if the ticket was minor and you have an otherwise clean record, your premium may not increase, she says. Even if you are cited as being responsible for a minor accident, it is possible to get auto insurance with accident forgiveness built in. If you are buying insurance for teen drivers, adding accident forgiveness may be money well-spent.
7. "I don't need comprehensive insurance for theft, because thieves don't steal old cars."
In reality, many criminals are attracted to older, trustworthy, popular vehicles, such as a Honda Accord or Toyota Camry, says Doran. Because of the popularity of these cars, there's a large demand for their parts. When thieves steal the cars, they can strip the parts and sell them, she says.
"On the other hand, if you steal a $70,000 Mercedes, there wouldn't be as much of a demand for the parts," Doran says. Comprehensive insurance does provide a host of other benefits and may be worth exploring if you are concerned about vandalism, hitting an animal, fire or other natural disasters.
8. "The laptop in my car is covered by my auto insurance policy."
Personal property, such as a laptop or cell phone, isn't covered under an auto insurance policy, says Petrarca. Those items are typically covered by the personal property insurance from your home or renters' policy, but a claim would be subject to a deductible.
9. "I recently paid my insurance premium, so I won't need a new policy for my new car."
Whenever you buy a new car, your insurance company will have to issue a new policy, regardless of when you paid for the previous policy, says Dick Luedke, a spokesperson for State Farm Insurance in Bloomington, Ill.
10. "My personal auto insurance covers both personal and business use of my car."
If you're hauling supplies or otherwise performing business duties in your vehicle, you must insure your auto for business use, says Luedke.
Take myths with a grain of salt. Determine the coverage that is right for you using Insurance.com's car insurance coverage calculator. Ask for all auto insurance discounts that apply to you, and compare car insurance quotes.