Auto Insurance Myths

Auto insurance is required by in almost every state.  It protects the insured financially in the event of an accident. Car insurance is a valuable asset; however, there are a lot myths associated with it. This blog will look at common myths that many Americans believe about auto insurance, and how you can protect yourself from these myths.

1. Full Coverage. It is a common term used when referring to what their auto policy covers, however, it is very misleading as there isn’t a policy that covers all accidents in full.  Auto policies will include limits for the amount they will pay for damages caused to others.   Additionally, most auto policies will only pay Actual Cash Value in the event your own vehicle is totaled.  Actual Cash Value is equal to the amount you could sell the vehicle for prior to the accident and has nothing to do with what it would cost to replace your vehicle.
2. Red cars have higher insurance rates.  This began when people began to believe those with red cars were more likely to get a speeding ticket as their vehicle was easier to spot by police officers.  While yes, speeding tickets can affect insurance rates, the color of your vehicle doesn’t. 
3. Anyone over 25 is covered.  Who is covered to drive your automobile can differ from policy to policy.  However, a typical auto policy will only provide coverage for individuals listed on the policy and for occasional drivers that have permission to drive the automobile. 
4. If I lend my car to a friend and the friend wrecks my car, his or her insurance will pay.  It will depend on the state you live in.  Some states will require the friend driving the vehicle to reimburse the insurance company if the vehicle is damaged due to their fault. 
5. My loan will be paid off if my car is totaled.  As mentioned earlier, most insurance policies will only pay the Actual Cash Value of the vehicle, which is defined as what the vehicle cost new less depreciation.  If you owe more money to the lender than the Actual Cash Value, you very well may end up owing on a vehicle that is no longer drivable. 
6. The only way to get coverage to drive any car is by purchasing “non-owners” insurance.  Auto insurance was designed to provide coverage for the car owner and not the vehicle itself.  The car is not going to be the one in court in the event a lawsuit results from a car accident; it will be the vehicle owner.  Therefore, in most cases (some exceptions), the auto policy will provide coverage for the policyholder when they are driving other vehicles.
7.  I can purchase auto insurance after the accident and I will be covered.  Insurance is designed to cover unforeseen accidents.  This philosophy could be compared to buying a lottery ticket after the numbers were announced and expecting to win. 
8. I don’t want to list my teen driver on my policy because I don’t want to be held liable if they get in an accident.  Parents are responsible for the actions of their children.  The auto policy does not create the liability; it provides coverage to the parent for that liability. If the teen is not insured, the parent will still be responsible for any accidents they cause.
9. If I have any personal property in my car, my car insurance will cover it.  Auto insurance is designed to cover the automobile, not personal property in the automobile.  Personal property in the vehicle can be covered on a renters or homeowner policy.

There are several myths regarding auto insurance. It is better to bust these myths so that you are not caught in a bind when buying auto insurance. Breaking these myths will keep you better informed and forearmed against misconceptions before purchasing auto insurance.  Always be sure to discuss your concerns with your auto insurance agent. Contact us 713-349-0400 or get a Houston Auto Insurance quote.