Debunking Auto Insurance Coverage Myths

3 Biggest Car Insurance Myths

With the seemingly infinite number of competing insurance coverage providers vying to win over new customers while retaining loyal policyholders, there’s a lot of confusion between fact and fiction. Although word of mouth is a powerful marketing tool, dissatisfied or confused customers may share unreliable information to family, friends, or co-workers when offering advice on insurance coverage. The following are three common myths regarding vehicle insurance coverage:

Red Car vs. White Car

We’ve all heard that red vehicles cost more to insure, but is that exactly true?

Fiction: The color of a vehicle, specifically cheery red, doesn’t cost any more in order to purchase insurance coverage.

Fact: The make, model, and year in which the vehicle was manufactured are considered factors when calculating premiums.

Perhaps the myth evolved from the fact that while red vehicles don’t hike up premiums, a red sports car is a different story. Insurance companies tend to look at sports car with higher premiums in mind due to the fact they are often more expensive to repair and involved in more accidents.

Popular Insurance Coverage Providers are the Best

Just because your favorite actor is promoting an insurance coverage provider, that’s not really a good incentive to purchase a policy.

Fiction: A well-known personality representing a company wouldn’t mislead customers about car insurance coverage.

Fact: Actually, it simply means the insurance company has enough money to pay a popular figure to be a spokesperson for their company and repeat whatever is on the script.

The only way to really determine a company’s performance is do some independent investigation. The first place to begin is the Better Business Bureau. Online insurer rating agencies are also a great tool to educate customers when opting to purchase insurance coverage including:

•    A.M. Best
•    Fitch Ratings
•    Moody’s Investor Service
•    Standard & Poor’s

Lawsuits Can’t Exceed the Amount of Policy Limits

Think you can’t be sued for unlimited amounts of money if you’re responsible for damages incurred in an accident? Think again!

Fiction: Many policy holders believe that their insurance coverage acts as an umbrella in the unfortunate event of a lawsuit, protecting at-fault drivers from being sued for amounts exceeding policy limits.

Fact: The true is policy holders can theoretically be sued for any amount to recover damages received in accident, often awarded by a jury. For additional protection against potential substantial lawsuits, opt for a personal umbrella policy or higher liability insurance coverage.

While there are numerous myths swirling around insurance coverage it’s always important to direct any questions or discuss concerns with your local agent.



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