The Truth About Auto Insurance
1. My insurance will cover anyone to drive my vehicle. Your personal insurance policy determines who is covered to drive your car. Usually, a policy will only provide coverage for individuals listed on the policy such as you and a spouse and for occasional drivers that have permission to drive the automobile.
2. If I have Auto Insurance, my car is completely covered. The term full coverage can be very misleading because there actually isn’t a generic policy that covers all accidents in full. The auto insurance policy you select for your car will include selected limits for the amount allowed to pay for damages caused to others and to your car. However, most auto policies will only pay the Actual Cash Value in the event your own car is totaled. Actual Cash Value is equal to the value of your car prior to the accident, not what it would cost to replace your vehicle.
3. Car color impacts insurance rates. Some people have heard the rumor that brightly colored cars have higher insurance rates. This myth began with the belief that those with red cars were more likely to get a speeding ticket since their vehicle was easier to spot by police officers. Even though speeding tickets can affect insurance rates, the color of your vehicle does not.
4. I can purchase auto insurance immediately after an accident, I’ll be covered. Insurance is there to provide protection for unforeseen accidents, not accidents that have already happened. While you can buy insurance for a car that already does have damage to it, but it wouldn’t help you. To fix the car, you would either pay to fix the car with your own money, or claim it on your insurance and potentially pay an increased premium every month. This idea is similar to buying a lottery ticket after the numbers were announced and expecting to win.
5. It is dangerous to put a teenager on my auto insurance policy. Parents are responsible for their children and all of their actions, including their driving. Adding your teenager to your auto insurance provides protection and coverage to the parent for a potential liability. If the teen is not insured, the parent will still be responsible for any accidents they cause, but without the protection insurance provides.
6. If I lend my car to a friend, their insurance covers an accident. This idea will actually depend on the state you live in and will be driving in, as well as your insurance policy. It is possible that your insurance policy will not cover anyone else driving your car, except for the individuals specifically listed on the policy.
7. If my car is totaled, my insurance will pay off my loan. Most insurance policies will only pay the Actual Cash Value of the vehicle, which is defined as what the car cost at the point of the accident. If you owe more money to the lender than the value of the car pre-accident, you may end up owing money on a vehicle that is no longer drivable. The only way this could be true is if your car is worth more than the amount you owe on it.
8. If my computer is in my car and damaged during an accident, my car insurance will cover it. Auto insurance will cover the car, not personal property in the automobile. A renters or homeowner policy will cover personal property, such as a computer, that is in the car and damaged during an accident.
There are several myths regarding auto insurance. It is better to know the truth behind these myths before you are caught in a bind. As you purchase auto insurance, know the truths behind what it will protect, and what it does not. As always, if you have any questions or concerns about an auto insurance policy, be sure to speak with your auto insurance agent.
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