When it comes to buying a car or a car insurance, you shouldn’t believe in everything that you read or hear as there are many car insurance myths spread around. The general feeling is that it is a long drawn out process, which basically beats you down and car salespeople or insurance companies always try to “put one over” on you.
Whilst proof can certainly be found in order to support this theory, the reality is that car insurance has drastically evolved in the past few years, and people have access to more information than before.
Nevertheless, there are several car insurance myths which continue being spread around. One of the biggest reasons for this is that you don’t really know how car insurance is calculated by the insurance company.
Also, these calculations are a closely guarded secret by many insurance companies, yet there are certain clues as to what makes the insurance rates rise.
It’s crucial that when you’re comparing your car insurance rates, you ought to do your homework and comprehend as much as you can, about how the rates are calculated, before taking out one.
In this manner, you’ll make it a more pleasant experience and end up taking out a car insurance you are comfortable with.
Also, whilst taking out car insurance, check for Payment Protection Insurance (PPI) and if you’ve already taken one, then it might have been added to your insurance without your consent. If that is the case, you must opt for PPI Reclaim to get your money back.
Here, we have debunked a few car insurance myths that might be costing you a fortune. Read on to know more:
Myth #1: The Colour of your Car does not Matter
The colour of your car doesn’t really affect the price that you pay for car insurance premium. This is considered as one of the most popular myths, which continues to do the rounds throughout the country, as well as across generations.
But if truth be told, a car insurance company does not really care what colour is your car while they’re calculating the insurance premiums. There are several auto insurance leads, which you can take a look at, in order to compare insurance premiums.
It’s a common belief that red and black cars are more expensive to insure. But, they don’t equate to a higher insurance rate merely because they’re red in colour.
A car insurance company only cares about the data on your car’s make, model and year. Also, they care about your history of driving, and the probability that they’ll have to payout a claim against the policy, more than anything else, whilst deciding the price they’ll charge you for the insurance premiums.
Myth #2: Sports Car Drivers always have Higher Car Insurance
Just because someone owns a sports car, it doesn’t necessarily mean that they’re automatically equated to having higher car insurance. Several studies have revealed that there are numerous other kids of car’s classes, makes, and models, which are more expensive to be insured, as compared to sports cars.
A car insurance company usually sets car insurance premiums, depending upon the expense and likelihood of a claim; this varies from one individual to another and is based on the type of car insured. There are certain cars, which have higher repair expenses and replacement parts’ cost, that can considerably raise the expense of their insurance premiums.
Myth 3#: You are Responsible even though your Friend is Driving
For almost every car insurance policy, the policy remains with the vehicle and not with the driver. So, if you let your friend or someone else drive the car, then you and your insurance company could still be held responsible for any kind of injury or damage caused due to the mishap.
Once your car insurance policy has maxed out, you might be able to tap into the driver’s insurance in the event of a mishap with loads of loss and damage. But, don’t ever make the mistake of believing the myth that you won’t be held responsible when you loan your car to someone else. Your car insurance and you can still be on the hook.
Myth#4: I’m Covered if My Car is Damaged
Your car might not be entirely covered by sufficient insurance, so as to repay your loan if it is damaged. Often borrowers roll their old car loan into new car loans, but most of the new cars decrease in value considerably, as soon as you drive it off of the car lot. This could create a gap between the value of your car and the amount of cash that you presently owe the bank, on your loan.
Almost every car insurance policy has a clause that they’ll only be paying out the expense of your car. They won’t be paying the amount of your loan balance, especially if the car is worth a considerably lesser amount.
You’ll require gap insurance, that is a separate and particular type of car insurance, which is generally utilised for this purpose. This type of insurance covers the gap between the money your car insurance would payout, and the remaining loan balance on your car.
Myth#5: My Car Insurance covers My Rental Car
You have to check with the car insurance firm well before you rent a car, in order to make sure that you have proper car insurance clauses, covering rental cars on the insurance policy.
Not every policy covers rental cars; also, it isn’t an automatic entitlement. You have to have it added in your present insurance policy, and generally this is an affordable provision to be added to the policy.
On the basis of the credit card that is used by you, you might already have car insurance as a credit card benefit. Most of the credit cards companies offer you car insurance coverage on rental cars, but provided you make use of their credit card. You ought to check to see whether you are covered for rental car insurance by the credit card or not.
Myth#6: Items in your Car may not be Covered
You might find out that your personal belongings, such as cell phone or laptop, might not be covered under the car insurance policy, taken out by you. These types of items are normally ruled out from the car insurance policy.
Also, claims have to be filled under the renter’s insurance or the homeowner’s insurance. This wouldn’t be cost effective, although based on the homeowner’s insurance deductible, that usually tends to be on the higher side in comparison to a simple car insurance policy deductible.
Myth #7: Using your Personal Car Insurance for Business
You ought to have an individual business car insurance policy for your automobile, especially if you’re using your vehicle for business related activities. Your personal car insurance policy will not cover the car, if you’re utilising it for business purposes.
You have to have a separate business and personal car insurance policy, so as to be entirely covered. Likewise, most of the business loans have clauses, which clearly mention that you carry insurance coverage, only for commercial car insurance and not as a personal policy.
Myth #8: Your Credit Score does not Matter
If you are looking to pay your car insurance on a monthly basis, then your insurance firm could take a look at your credit rating in order to check how you’re currently handing your finances.
Most insurance firms want to make sure that when your payment is due, you are able to pay for it, and for this additional risk (if you’ve a low credit rating) they might add extra costs to your insurance premium. One of the best ways to get around this, is to pay for the insurance in one lump sum, so that you’re covered for the rest of the year.
Though paying annually could burn a hole in your pocket, in the sense you’ll have to pay a huge amount, it can save you cash in the long run, as the price is likely to be affordable and not based on your credit score.
To sum up, there are several car insurance calculators, which could help you find the best deal. Also, everything else is car insurance myth, which continues to do the rounds in the society.
So, knowing as much as you can about all these myths, would in turn, help arm you with the necessary information you require to save money.