When buying car insurance, it is important to understand the premium structure and the factors that affect your premium. But sometimes it is difficult to distinguish between fact and fiction because, as in other segments, the automotive insurance sector has its share of myths. The lack of understanding of motor insurance can affect the choice of policy or affect financial interests. In addition, myths surrounding insurance, whether it be a car, a home or a health, play an important role in putting you in an amazing state of mind. Because of its stubborn and unrealistic nature, it causes damage and brings no good.
The common myths are exposed below:
“No error insurance means it’s not my fault!”
No fault car insurance varies by state, but usually requires your auto insurance company to pay medical expenses and lost wages for injuries due to a car accident, regardless of who is to blame.
“After an accident, blameless insurance lets all parties receive payment for their immediate medical needs, while their insurance companies decide among themselves which company will pay for the accident,” says Michael Petrarca, vice president of Amica Mutual Insurance Co. in Lincoln, R.I.
If you caused the wreck, that doesn’t mean you’re off the hook. The insurance companies determine who is to blame, and that party (and its insurer) are responsible for property and other damages, he says. If you are responsible, you need a collision to repair your vehicle. No fault is for medical bills, not for property damage. If another party is guilty, get their car insurance information so you can make a claim under their property liability insurance.
“The color of my car affects my insurance rate.”
Car insurers set tariffs based on a vehicle’s safety features and how much it costs to repair or replace the vehicle (including through the driver). But the color of the car doesn’t play a role in the premium, says Petrarca. “Some makes and models generate more claims than others, and they are rated accordingly, but the color of a vehicle means nothing,” he says.
“Third party cover is always cheaper than fully comprehensive insurance”.
The truth is that while it may seem logical that a lower level of cover would cost less, this is often not the case. Drivers who opt for a lower coverage level usually have a history of more claims, which has pushed up the cost of these insurances.
For many drivers, fully comprehensive insurance can cost the same or even less than a pure third party or a third party, fire and theft insurance – with the added bonus that your own vehicle is insured against damage.
“My premium should drop or stay the same every year if I don’t make use of it.”
The truth: In an ideal world this would be the case – after all, you build up a bonus without claims every year which you do not claim. However, there are many external factors that affect the cost of insurance. In particular, there have been many changes in 2017 that have driven up prices for most motorists.
It’s also worth keeping in mind that most insurers have a maximum bonus without claims, so after a certain number of years you stop building up a discount. Insurers will also take your age into account, so you will be considered a higher risk at a certain age and your premiums may increase. You may also notice your premium changes if you make changes to your policy, such as changing your workplace or address.
“No claim bonus protection will increase my premium.”
The truth: Many people think that paying an extra premium to protect their no claims bonus will prevent their premium from rising if they make a claim. But as with many insurance issues, it’s not that simple.
Although you won’t lose your no-bonus if you file a claim and you have paid to protect it, your premium itself may still increase because your insurer sees you as a higher risk. Since your no claims bonus is a discount on your premium, the amount you pay on renewal may still increase. And there is a limit to the protection provided – if you submit more than one claim per year, your insurer may take away a year or two of bonuses (but you’ll probably still be better off than if you had no protection and lost your entire discount). More information can be found in our no claims bonus guide.
“A car insurance only covers accidents.”
Reality: Insurers know you can’t control fate.
In addition to accidents, the car insurance also covers damage caused by events that are beyond your control. This includes natural disasters such as lightning, earthquakes, floods, landslides, etc., as well as man-made disasters such as burglary, theft, riots, terrorist activities, damage during transport, etc. So don’t worry about telling your insurer that it wasn’t your fault!
“The insurance applies to regular repairs”.
One thing that your insurance will not cover are repairs for wear and tear and normal defects that result from the depreciation of your car. You are responsible for the maintenance of your car, which means that you will learn how to check it yourself or that you are building a relationship with a mechanic you can trust and bring your car into your home for regular checks.
In addition, reporting too many car problems to your insurance company in an attempt to cover them is likely to be counterproductive. By repeatedly telling them that your car is putting you in trouble, they will only want to increase your insurance premiums.
“The insurance company pays the value after an accident”.
When your car is fully aggregated after an accident, your insurance will consider a number of factors to determine the true value of your car to determine how much you want to pay as a benefit. However, one thing they will not do is try to calculate the ACV of your car after the accident.
After a wreck where your car is totaled and you need a car accident lawyer, the value after an accident is almost certain to be almost zero. Your insurance company cannot use this value and will instead calculate the value for the accident. However, don’t be surprised when that number is lower than the Kelly Blue Book claimed value of the car, because insurance companies are looking for legal ways to minimize payout.
With these myths unmasked and dispelled, you can now put your mind at ease. The next time you buy insurance policies, know that these falsehoods do not affect how much premium you have to pay. Read the terms and conditions carefully, and clarify any questions with your insurance agents – we don’t need any more false rumors coming around it like it is.