Common myths about car insurance debunked!
There are many myths about car insurance that have been floating
around for years, and some of them may affect your buying
decision. Educate yourself--or un-educate yourself, in this
case--and you can make the smartest decision about your car
insurance.
Myth: The day you turn 25 (or 18, or 35,) your car insurance
rates go down.
It is true that most insurance companies lower rates as drivers
get more experience, often at age 25. But it won't do any good
to call your car insurance company on your twenty-fifth
birthday, because you won't be re-rated that day. An insurance
company generally is commiting itself to a rate when it sends
you your renewal bill, and unless you make a change in the
middle of your policy period, you won't be rated again until
your next insurance renewal.
The good news about this is that accidents and tickets work the
same way. If you get a ticket after you have already received
your renewal, you normally won't be charged any points on your
car insurance until it renews again or until you make a change
to your policy.
Myth: Red cars cost more to insure.
This is a common misconception, probably started somewhere as a
car insurance urban legend. Your full coverage insurance cost is
decided by the VIN (Vehicle Identification Number) of your car,
and there is no indicator in the VIN as to what color your car
is. Incidentally, though, red auto paint does cost more to
repair facilities, so a car insurance company could have to pay
out more in the case of an accident.
Myth: One claim can get you canceled.
It is certainly possible to have your car insurance canceled
after only what claim. But car insurance companies have an
underwriting process that takes a lot of factors into
consideration. They will look at the number--and the dollar
amount--of claims you have had over a period of time. The amount
of time you have been with that insurance company is also a
factor. Frivolous claims entered repeatedly by customers could
be a reason for cancellation or nonrenewal, but there is no
reason to avoid turning in claims on your car insurance policy
if you stand to suffer significant financial loss.
Myth: As my car gets older, my insurance should go down every
year.
It is true that the newest of cars cost the most to insure, but
often the fact that your car is a year older doesn't mean your
car insurance rate will go down. If the vehicle is old enough so
that you don't feel like you need to carry full coverage on it
anymore, that will lower your rate significantly. But as long as
you carry full coverage on a car--even an older one--you
probably won't see your rate decrease.
This is because the majority of accidents are not "total
losses"--when the vehicle is damaged beyond repair and the
insurance company pays out the value of the car to replace it.
Most claims involve the repair of a vehicle, and the cost of car
parts does not decrease significantly just because the car is
older. In addition, labor costs for repair do not change at all,
no matter how old the car is. The insurance company risks losing
as much money on repairing an older car as they do a newer one.
When you are shopping online to buy your new insurance policy,
it is important that you educate yourself as much as possible.
Don't fall victim to myths that could affect your buying
decision!