Fact or fiction? 5 common car insurance myths debunked

Posted: March 12, 2019 | Word Count: 726

Trimming costs is, hands down, the easiest way to put more dollars in your pocket. When looking at the major expenses in your life, insurance is often seen as a big one. While there are well-known tips for saving on insurance, like bundling home and auto, a good first step is to have accurate information. “There are a lot of myths out there about what impacts insurance rates,” said Eric Madia, vice president, product design, Esurance. “Dispelling some of those myths upfront will not only save people money, but will also help ensure they’re properly protected.”

Esurance is on a mission to make insurance simple, transparent and affordable. To that end, Madia is shedding light on five common insurance myths and misconceptions, helping to make insurance surprisingly painless by clearing up some of the confusion.

Myth: Full coverage covers everything.

Here’s the truth, “full coverage” doesn’t actually exist. It’s a phrase that people often use, but since it’s not an official coverage package, it has a different definition to everyone. Some people expect “full coverage” to include every layer of protection available, while others may be looking for the most common or basic levels of coverage. To avoid confusion, the best approach is to work directly with your insurer to understand your coverage options and tailor a policy that’s right for you.

Myth: Opting for the minimum coverage will save you money.

It’s true, the less coverage you have, the lower your premium will be. That said, if you’re not covered properly you could end up losing a lot of money. For instance, while you may not drive an expensive car, you’re financially responsible for the damage you cause to another car. There are a lot of expensive cars on the road, so just think how much you may be paying out of pocket if you accidentally hit one of them. Property damage (PD) coverage is what protects you in this situation, but the total coverage you get should be determined by where you drive, not what you drive. “Increasing your PD coverage could cost you less than $1 per month, which is minor compared to how much you could end up paying if you’re responsible for totaling someone else’s car,” said Madia. “It’s easy to think about what’s going to benefit you most in the present moment because you never expect to need the coverage, but when you do it’s too late.” What does this mean? It’s worth paying a little more now to save a lot later.

Myth: Car insurance rates decrease at age 25.

Auto insurance rates don't necessarily drop automatically when you turn 25, but most drivers do start to see decreases in their car insurance premiums as they gain experience. If you've been licensed since you were 16 and maintain a clean driving record, you'll likely start seeing lower car insurance rates when you hit your mid-20s, and that may continue into your 30s. If you didn't get your license until later in life, you'll need to gain additional driving experience before you can expect any cost reductions.

Myth: Car insurance premiums rise automatically after an accident.

There’s no hard-and-fast rule that says an accident leads to a higher rate. Insurers consider many factors before deciding to adjust your rate. They look at things like the total cost paid for a claim, your driving history and whether or not you were at fault. All of these considerations mean that while it’s possible your rate will change after filing a claim, there are also many reasons your rate could stay exactly the same.

Myth: It costs more to insure red cars.

Color is not a determining factor in calculating your auto insurance premium. It doesn't matter if you drive a black, red, or neon green vehicle. What does matter is the year, make, model and body style of your vehicle, as well as your driving record, how much you drive and the drivers listed on your policy.

To get the best rates and the best coverage, it’s important to know the facts. Esurance works hard to make sure those facts are easy to understand, so you feel confident you’re getting the protection that's right for you. See for yourself at www.esurance.com.

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