Auto insurance is one of the most important parts of owning a vehicle. Not only does auto insurance have the chance to save you large amounts of money, but it’s also legally required in every state except New Hampshire.
The purpose of auto insurance is to protect you financially in the event of an accident, or any situation causing damage to your vehicle. You pay a monthly price to your insurance agent and, in turn, they cover the cost of any damage to your vehicle (minus your deductible). Because many drivers don’t have enough money saved up to repair their vehicle should they be in a crash (or should their vehicle be damaged by someone or something), insurance becomes a life saver for many.
Every insurance plan is different depending on your insurance agent and the plan that you have opted for - but all insurance plans have the same basic rules. However, these rules are not always well understood, and there are a large number of popular insurance myths: things that people believe to be true about their insurance, but are actually inaccurate. If you believe these myths to be true, they may change the way you handle owning a car and having insurance, so it’s important to know exactly what your plan actually covers. Here are five of the most common myths about auto insurance that you should never fall for.
5. Your insurance only covers you if you’re not at fault
Many people believe that if you cause an accident, your insurance company will not help you out. The reality is a little more complicated. Most drivers have collision coverage, which means that their vehicle is completely covered by their insurance company - regardless of who is at fault in an accident. However, some people only have liability insurance. Liability insurance will cover any damage that you cause to other vehicles, but not to your own.
Collision coverage is better to have than liability insurance, but it can be a little pricier. Be sure to know exactly what is on your insurance plan so that you know what is covered.
4. Flashy red cars are more expensive to insure
It’s a pretty common belief that red cars (and other cars with bright paint jobs) attract speeding tickets. The theory goes that if a car is more likely to catch the eye of a police or highway patrol officer, then that car is more likely to be pulled over. Somewhere along the line, this belief morphed from being about tickets to also being about insurance, with a large number of people believing that a bright red car costs more money to insure.
In reality, both beliefs are false. Paint colors that catch the eye won’t make you more likely to get a ticket, and they certainly have no bearing on your insurance rates. However, many flashy looking cars (such as sports cars) do have higher insurance rates - but that’s only because they’re expensive, fast, and potentially dangerous, not because of their paint color.
3. Auto insurance protects items that are stolen from your car
While auto insurance covers many things, it does not cover any of your possessions that you leave in the car. However, if you have homeowner’s insurance or renter’s insurance, they will cover your lost items if your car is broken into.
That said, if a thief breaks into your car to steal your possessions and damages the car in the process (for instance, if they break a window to enter the vehicle), then your auto insurance will cover those damages. But the insurance only covers parts of the car, not items that were stored in it.
2. When your insurance pays you for a totaled vehicle, it covers the post-accident price
A totaled car is one that is deemed a total loss. This definition varies slightly depending on your insurance company, but in general it means that the vehicle either cannot be repaired, or the cost of the repairs would exceed the worth of the repaired vehicle. When your car is deemed totaled, the insurance company will not pay for any repairs, but will instead cut you a check to cover the appraised cost of the car.
The confusion lies with whether the insurance company appraises your car in normal condition or post-accident condition. Many drivers believe that an insurance company will pay you only the price of the damaged vehicle. For instance, if a car was worth $10,000 before the accident and $500 after the accident, many people think they would only get reimbursed $500. Thankfully, it’s the opposite: the insurance company will pay you however much the vehicle was worth prior to the accident. The company will then sell the totaled vehicle for parts, and they will keep whatever money is made there (so, in the previous example, you would receive $10,000, and the insurance company would keep $500).
1. Your insurance agent covers your mechanical repairs
The purpose of car insurance is to cover the completely unexpected damage that occurs to a car, which you cannot predict or prepare for. This includes everything from accidents you cause, to someone hitting your parked vehicle, to a tree falling onto your windshield.
It does not, however, include mechanical repairs to your car which are a standard part of owning a vehicle. Even though you don’t know precisely when you’ll need a mechanical repair, when you purchase a car you are knowingly committing to a vehicle that will need to have tires changed, shocks replaced, and engines repaired. Your insurance company will not cover these costs (unless they are caused by an accident), so you will have to pay for all of them out of pocket.
You should never drive (or own) a car without insurance - both for legal reasons and to avoid being unprepared in the event of an accident. However, you should always be aware of what exactly your insurance plan covers, so that you know what your protection is - and so you don’t fall for any of these popular insurance myths.
This article originally appeared on YourMechanic.com as Top 5 Insurance Myths You Shouldn’t Fall For and was authored by Brady Klopfer.