Biggest Car Insurance Company Misconceptions

Are These Big Car Insurance Company Myths Costing You Money?

In the US, almost every drive must have some type of car insurance. With so many of us, you would think that the way auto policies work would be common knowledge. But most of us leave the details to our agents, and so a lot of big car insurance company myths are being passed around as common knowledge. Maybe this list will inform or entertain you!

New Cars are More Likely to Get Stolen: This is not actually true for a couple of reasons. Older cars, without the latest anti-theft devices, may actually be much easier to steal. Theives can also find an active stolen parts market, and these parts are usually requested to the older cars we need to keep running.

Minimum Required Insurance Covers Everything: Actually US states only require liability insurance. This insurance actually pays the other guy in case you are at fault in an accident. You need collision and comprehensive coverage to losses to your car.

We used to be advised to drop other coverage on older cars. But you may not save that much money, and you have to think about how you would replace your transportation if you did have an accident that was not covered.

If My Car is Covered, Insurance Will Pay For All Repairs: This one has certainly caught me and other people I know. If your damages will cost more to repair than the book value of your vehicle, the insurer may “total” your car. This can put you in a tough situation if your car is old or new.

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Gap insurance helps cover newer vehicles up to the total loan value so it can get paid off. This helps if you are upside down on your car loan. In other words, if you owe more on your loan than the book value of your vehicle, gap insurance covers this.

But people with older vehicles can have a problem too. Let us say you have kept your 10 year old car in very good working condition, and you rely on it for transportation. An accident may damage it, and repairs could cost more than the book value of an older car. But the car cannot really be replaced for that book value either. Most of us do not have gap insurance on older cars.

Bigger Cars or Trucks or Safer and Cheaper to Insure: This is not always true. An auto’s safety is more about design than how many tons of steal went into it. You need to ask your insurer to help you find cheap car insurance for any vehicles you are comparing. They can tell you which vehicles will cost less to cover.

Popular TV Ads Lead to Cheaper Car Insurance: I know this is not always true. Your own best auto insurance rates will be determined by many factors. Sometimes the so-called discount insurer will not be your best bet. Some other companies may offer deals, like auto and home discounts, which will allow you to insure cheaper than the company you think is the famous cheap company.

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