When it comes to car insurance, a small monthly premium protects not only an asset you rely on every day, but also you and your family’s health and well-being if you’re ever involved in an accident. Insurance policies can be confusing, but don’t buy into these myths that can unnecessarily take money out of your pocket:
MYTH #1: My insurance will cover me if my car is stolen, vandalized, or damaged from hail or fire.
FACT: Unless you have comprehensive coverage, you’re not covered for any of these things. In most states, a bare-bones policy only requires you to buy liability coverage, which pays only for damage you cause to others. To be fully protected from all types of damage situations, you need to purchase both collision and comprehensive coverage. Collision coverage pays for damage to your vehicle from an accident, while comprehensive coverage pays for damages to your vehicle that are not the result of an accident, including theft, vandalism, hail, fire, and accidents involving animals.
MYTH #2 – My credit has no effect on your insurance rate
Your credit-based insurance score does matter. Why? An insurance score is a measure of how well you manage your financial affairs, not your financial assets. Many insurance companies take your insurance score into consideration when you want to purchase, change or renew your auto insurance coverage. Because the majority of people have good credit, and insurance scores are derived from a person’s credit history, most people end up paying less for insurance when insurance scores are factored into the pricing equation.
MYTH #3: Working with a direct company is always cheaper than going through a local agent.
FACT: Although direct companies save money on costs by not incurring agent commission fees, that doesn’t necessarily mean they pass those savings on to you. Many direct auto insurance carriers put those savings back into marketing their products. If you’re comfortable working with both a local agent and a direct carrier, it’s always best to shop around. Local independent agents often have access to multiple carriers so they can shop the market on your behalf.
MYTH #4 – If other people drive your car, their auto insurance will cover them in the event of an accident
In most states, the auto insurance policy covering the vehicle is considered the primary insurance, which means that the owner’s insurance company must pay for damages caused by an accident, regardless of who is driving. Policies and laws differ by state, so make sure you understand the rules before allowing another person to drive your car.
MYTH #5 – Personal auto insurance covers both personal and business use of your car
If you are self-employed and use your vehicle for business purposes, personal auto insurance may not protect you. While commercial auto insurance can be more costly than a personal policy, one of the best ways to keep your auto rates down in any situation is by having a good driving record. If there are others, such as employees, using your car check regularly to make sure they also have good driving records.
We all know how misunderstandings and miscommunication can easily snowball into rumors, even into myths and legends. Take them all with a grain of salt. Call us today at 219-972-6060 so that we can help you determine the coverage that is right for you.