Most states need car insurance coverage, so if you own a car, chances are good that you have an insurance policy. However, how well do you know about your car insurance?

Car insurance is an essential type of insurance that every driver should have. Not only do most states mandate coverage, but car insurance also offers significant asset protection.

Unfortunately, many customers have serious misconceptions about car insurance that may impact the premiums or rates they pay or the type of coverage they receive. Here are some common myths about car insurance that many drivers hold.

Car color matters

One of the most prevalent car insurance myths is that the color of a car impacts car insurance costs. It is widely assumed that red cars are more expensive to insure. In fact, car color has nothing to do with car insurance premiums.

Because different types of cars are more or less secure and more vulnerable to theft, the manufacturer and model of an auto might affect rates. However, because color alone has no impact on the possibility of an insurance claim happening, insurers do not consider it when determining how much insurance should cost.

Your car insurance covers all possible losses.

Another common car insurance myth is that auto insurance covers all possible losses. However, depending on the type of insurance they hold, drivers stand a significant risk of out-of-pocket payments.

For example, a driver would only have liability insurance if they bought the minimal coverage their state mandates. If the insured policyholder causes an accident, their insurance will cover the losses incurred by other drivers. However, without a crash or comprehensive insurance, an insurer would not be obligated to make any payments if the vehicle was stolen or destroyed in an accident by the driver.

Every driver must be aware of the many types of coverage that are offered and ensure that they are purchasing all the necessary insurance.

Your credit would not affect your insurance rates.

Your age, insurance claim history, and driving record are just a few factors that might affect your car insurance rates. The same goes for your credit history, which shows how quickly you will pay back loans.

Most states allow car insurance companies to utilize credit scores when determining premiums because those with better scores typically have fewer accidents. Therefore, they are less expensive for insurance companies. On the other hand, people with a history of negative ratings on their credit reports are frequently viewed as higher-risk buyers who must pay higher insurance rates as a result.

Personal insurance covers the business use of a car.

Many people mistakenly believe they would be protected if they used their cars for business. That is not always the case if a driver has personal insurance and has not stated that the car would be used for work purposes. It is essential to be upfront with a car insurer about how a vehicle is used to ensure that insurance offers proper coverage.

If you let someone else drive your car, their insurance will cover them.

Car insurance is typically based more on the car than the driver. Car owners frequently are not aware of this and believe that lending their vehicle to a friend or an acquaintance is risk-free because their friend's insurance would take care of any problems that may happen.

The truth is that if a driver gives a passenger control of their vehicle and that person causes an accident, the owner's insurance will pay for damages. And this can result in car insurance becoming more expensive for the owner.

Getting a traffic ticket will automatically increase your premiums.

Even while getting a traffic ticket is never pleasant, if the violation was minor and your record was otherwise clean, it might not result in a rise in your insurance rates. In some areas, you can enroll in classes to lessen or get points off your license, lowering your car insurance premium. However, keep in mind that if you receive many traffic penalties, your rates may be impacted.

Your car insurance costs more when you get older.

Special discounts may be available for older drivers. If a person over 55 completes an accident prevention course (offered by local and state authorities and the AARP and AAA), for instance. In that case, their car insurance price may be lowered. Retirement or part-time employment, which results in fewer driving hours, may also qualify for an auto insurance discount. If you believe you may be eligible, check with your insurance expert. Older driver incentives and discounts differ by state, insurance carrier, and driver age.

1. It is acceptable to have only the state-minimum liability insurance.

Even while most states mandate that drivers maintain a specific level of liability insurance, if you are in an accident, that level of coverage will not likely be sufficient. By purchasing the bare minimum, you subject yourself to higher out-of-pocket expenses, which can be highly costly in the event of an accident. Discuss the appropriate amount with your agent, depending on your unique driving style and financial position.

Bottom Line

Knowing the truth about car insurance myths is important to make a smart decision about coverage. By understanding the truth behind the car insurance myths and facts, drivers may ensure they are receiving the protection they require and can realistically understand the elements that affect their car insurance premiums.