Let's Talk CARS

Our car experts weigh in on financing, maintenance, and everything in between!

 

All Posts

7 Common Insurance Myths You Shouldn’t Fall For

Insurance is a must-have accessory to your new or new-to-you car purchase. However, when buying a new policy or renewing your old one, there are a few things to consider. Several myths exist about buying insurance, here are a few of the most common that could impact your next buy:

Myth 1: The color of my vehicle affects my premiums.

Truth: Color usually plays no role in deciding how much your premium should be. Instead, insurance carriers look at the following:

  • Make
  • Model
  • Year
  • Age of vehicle
  • Age of primary driver
  • Engine size
  • Credit history

So buy the red one if you want to!

Myth 2: Buy from a direct agent, it will save you money!

Truth: Shopping around will save you money. Whether or not you price premiums online or use a dedicated agent has no bearing on your premium. What will save you money is shopping around for several different premiums. If you want the lowest rate when shopping, use an independent agent or just do a comparison yourself.

Myth 3: Your insurance will pay off your entire loan if your car is totaled.

Truth: Your insurance pays off the fair market value of your car. Since cars depreciate in value, you will want to make sure that you buy the appropriate amount of coverage to cover any outstanding loan after insurance. A great supplement to purchase is gap insurance, which will cover the amount left after insurance pays the market value of your car.

Myth 4: Your credit score does not affect your premium.

Truth: Let’s just assume that your credit score affects everything, even insurance rates. Most states even allow insurance companies to give you a credit-based insurance rate which factors in your credit score and guides them to gauge how long it’ll take you to pay off your loan.

Myth 5: If you let someone borrow your vehicle and they have an accident, it is their fault, not yours.

Truth: Your car, your insurance. Your personal policy will follow your car. If your policy is maxed out, think about getting umbrella insurance.

Myth 6: Your policy can be cancelled at any time.

Truth: No, it cannot. Only under certain circumstances is your insurance company allowed to cancel your policy before it expires. Grounds for cancellation usually include fraud and/or non-payment of your policy.

Myth 7: An expensive car costs more to insure.

Truth: Not always. Insurance carriers usually factor in “loss history” on your vehicle, meaning if your car is a more inexpensive standard vehicle that is known to have a lot of issues, it will cost more to insure than a luxury vehicle with a seamless record among drivers. If they’ve paid more claims on that make and model, chances are your premiums will be higher. They will also factor in the cost of repairs or replacement.

Have you fallen for any of these myths before? Always do your research before purchasing a new vehicle and the insurance policy that goes with it. And, as always, before you sign on the dotted line, read the fine print!

Collierville Auto Car Experts
Collierville Auto Car Experts
At Collierille Auto, we are true car experts with decades of knowledge and experience. Let us guide you through the ins and outs of the car buying journey. Your ride is waiting, and we're here to help you find it!

Related Posts

The Evolution of the Minivan

The minivan has become a symbol of modern suburban living, but where did it all begin? While Volkswagen and Chrysler both claim to be the first to market, neither the VW Minibus or Chrysler’s first three minivans were actually where it all began. The DKW Schnellaster and the Citroen H-van were the early predecessors of the minivan we know today. They came to market in 1949 and 1947 respectively. The Citroen H-van was available three full years before the earliest VW Bus. But perhaps the most underrated of them all is the very first of its kind, the Chenard & Walker CHV, which was unveiled in 1946 by the French automaker.

What's In A Nameplate?

The Beginning Since its unveiling in 1913, the Chevrolet bowtie emblem has seen numerous changes. Its shape has become synonymous with the durability and craftsmanship known to the Chevrolet community. For over a century, the emblem has been the brand marquee, but do you know where it came from? Neither do we! At least, not exactly... 

Your Car Is Totaled, Now What?

Car accidents can be traumatizing, but the aftermath doesn’t have to be! The last thing you should be stressing about is the car - take care of yourself physically first, and above all. The first step in dealing with the vehicle-related fallout is to research the value of your vehicle before the accident. “Totaled” is just a buzzword insurance companies use to qualify an accident that has left your car in a condition in which the repairs will cost roughly 75 percent or more of the vehicle’s worth (this number varies by state, however, and may be as low as 50% or as high as 100%). This term is only applicable if you file an insurance claim. Who was declared at fault in the accident is an important consideration. If you were at fault, your insurance policy should at minimum cover the other driver's vehicle and any associated medical bills, up to your coverage limits; you're responsible for any damages beyond those limits. If you want to avoid filing an insurance claim altogether, you and the other driver can agree that you'll pay them directly and bypass your insurance company. If you were at fault, but only have liability coverage, you would be responsible for any repair costs for your vehicle. (If you aren't sure what all the different types of insurance policies include, check out our blog post where we break it all down for you!) Depending on the value of your vehicle and the damage sustained, it could be more cost effective to pay out of pocket for your vehicle's repairs, or simply choose to salvage the vehicle and purchase another. If you were not at fault in the accident, the responsible party's insurance will handle the claim, or once again, the other driver may ask that you provide an estimate for repairs and let them pay you directly, rather than file an insurance claim. Overall, you really have three options after an accident: File an insurance claim. If you have comprehensive coverage and/or gap insurance, filing a claim will probably be your best option, especially if you have an existing loan. You will file a claim with the insurance company (yours or the other driver's, depending on who was at fault), and they will appraise the value of your vehicle and send you a check. However, after you have received the appraisal amount but before you accept the payout, make sure you have done your research to be assured the amount they are offering is fair. If you find that there is a large difference in the vehicle's value based on your research versus what the insurance company has offered, find a third party appraiser. But make sure the value is a large enough difference to matter, because you will be responsible for paying the appraisal fee. Pay to fix it. If your car is older and not worth a lot of money, it may be more cost efficient to pay out-of-pocket (for example, you may choose to repair the mechanical damage to get your car in safe driving condition, but opt not to repair cosmetic damage). Weigh your options and crunch the numbers. You may find that it's most cost effective to fix it without filing a claim and either sell it or drive it until you can buy a new car. Salvage it. If you don’t have enough coverage to cover a totaled vehicle, you can sell it to a salvage yard or dealership under a salvage title. You should only consider this option if you think you will get more from selling it than filing an insurance claim. One final consideration you shouldn't overlook is gap insurance. Say you bought your car brand new and spent $20,000. After the first year, your car may only be worth $15,000, but you may still owe $17,500. If you are involved in an accident, the insurance company will only pay you what your car is worth: $15,000--you will be responsible for paying the remaining $2,500 to your auto lender, unless you have gap insurance, that is. Gap insurance is very important, especially if you buy new, or the term of your loan is spread out over several years. If you're in this situation, you're leaving yourself vulnerable by being upside down in your loan (owing more than the vehicle is currently worth).