Prevalent Misconceptions About Auto Insurance: Setting The Record Straight

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It is very simple to understand auto insurance. When you look below the surface, it’s easy to become overwhelmed with details. It is no surprise that motorists have many misconceptions about the industry.

These myths can lead to confusion. This confusion leads to poor decisions by many people about their coverages and the rates they pay. We’ll be exposing six common myths. We want to dispel or at least clarify them so that you and your family can make better auto insurance choices.

#1 – A No-Fault Insurance Program Eliminates Fault

The term no-fault insurance is not well-known. It is often misunderstood to mean that people who are in a collision with another vehicle are not responsible for the accident. This misconception is common. No-fault insurance means that your insurer will pay for any injuries or damages you sustain as a result of an accident. Others involved in an accident, including passengers, would also seek compensation from their insurers.

Fault for an event can still be applied to the relevant parties according to the province’s fault determination laws. These parties can see a decrease in their premiums.

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#2: Driving a red car means paying higher premiums

Your vehicle’s colour does not affect your rates. Few insurance companies require policyholders to reveal this information. Rates are calculated using a variety of factors, including your driving record, address and average annual mileage. The only thing that is excluded from this formula is colour.

#3: Car thieves target late model vehicles

Evidence shows that older models are the most stolen cars in Canada. The following are the top five most-stolen vehicles according to an IBC 2009 report:

2000 Honda Civic SiR 2-door2003 Cadillac Escalade ESV 4 Door AWD
1999 Honda Civic SiR 2-door
2006 Chevrolet/GMC Trailblazer SS 4-door 4WD
2002 Cadillac Escalade EXT 4-door AWD.

Research the most common vehicles, trucks and SUVs targeted by thieves if you want lower rates. These vehicles will be more expensive to insure.

#4: Driving without a seat belt doesn’t affect your rates

Your insurance company may raise your premiums if you are cited for driving without a belt. People believe their rates will stay the same because they don’t technically put anyone at risk. This belief is understandable. Here’s why auto insurance companies think differently.

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You are taking a greater risk by choosing to drive without a belt than was implied in your policy. As an example, let’s say your head hits your steering wheel and causes brain trauma (and possibly a stroke) due to the collision. Long-term and hospitalization are costly. The insurer sees the increased risk as a reason to raise the rate.

#5: Personal Belongings Covered If A Vehicle Is Stolen

These items will not be covered if you leave your clothes, laptop, or other personal property in your car and it is stolen. These items will not be covered and you will have to pay for their replacement. Many consumers are surprised by this as they assume that their auto insurance will cover them for the loss.

Consider purchasing property insurance coverage if you have personal items in your car. You will have your PDA, golf clubs, and any other personal items covered in the event of a stolen vehicle.

#6 Auto Insurance Rates The Same

This is the biggest myth about car insurance. Many people believe that their current premiums are the industry average. There is often a wide range of rates among insurers. Comparing quotes from different companies is the only way to find the lowest rates. Do it at least once per year.

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Car insurance is something few people enjoy. It is difficult to understand the details and it can be a product that you will never need. It is important to ignore the above shortcomings in order to find coverage that suits your needs and fits within your budget.