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HomeFINANCE10 Myths About Car Insurance (And Some Truths)

10 Myths About Car Insurance (And Some Truths)

Top myths about auto insurance

1

The color of the car influences the price of insurance

Myth. Insurers consider many variables when calculating the price of your car insurance, but car color is not one of them. If the car of your dreams is red, go ahead and buy it without fear. You will not be penalized.

two

Women pay less in premium than men

Truth. The rule, however, is not quite this. Insurers don’t charge women less for being women, it’s not a sexist benefit or positive discrimination.

what happens is that the car insurance premium is linked to the risk of accident that the driver has – and statistics show that there are more accidents involving men than women.

Thus, insurers look at the numbers and conclude that drivers, because they have a statistically lower risk of having claims, may be entitled to a lower premium.

3

Insurance is more expensive in cities

Truth. Once again, statistics are to blame: because they have more traffic and more cars in circulation, urban areas with greater population density increase the risk of accidents, which is why insurers increase the price of insurance for city drivers.

4

Insurance covers natural disasters

It depends. This is one of the hardest auto insurance myths to dispel, because the answer varies by policy.

Natural disaster coverage does exist, but it is paid individually. Your car may or may not be covered, depending on whether you purchased this coverage from the insurance company or not. You have to confirm it in your policy.

5

New cars pay more insurance

Myth. New cars may even pay more, but it’s because of the market value of the car (how much the car is worth) and not because of age. A ten-year-old top of the range car, for example, may well pay a higher premium than a new entry-level car.

6

A defensive driving course can lower the price of insurance

There are those who think that this is just one of the many myths about car insurance, but it must be admitted that it is truth.

Insurers increase or decrease the price of insurance depending on the risk of loss, and holders of a defensive driving course reduce that risk. For this reason, those who take the training are in a position to negotiate a lower premium with the insurer.

7

Older cars pay more for insurance

It might be myth or truth, depending on the age of the car. An old car of a very popular brand and the model of which is still produced on a large scale today may not have an insurance increase. However, an old car of a model that is no longer manufactured may be penalized in the premium.

The criterion is the ease of repair and access to parts: the more difficult it is to repair the car in the event of an accident, the greater the risk assumed by the insurer – and, consequently, the greater the premium to be paid by the policyholder.

8

The insurance covers the vehicle’s load

It depends of the policy. Cargo coverage exists, but has to be contracted separately. If it’s included in your policy, you can expect a refund in the event of an accident or theft; if your policy does not specify cargo coverage, it is not covered by the insurance you are paying for.

9

A locator lowers the price of insurance

Truth. If you install a locator in your car, the insurance company appreciates the increased probability of recovering the vehicle in case of theft and rewards you with a cheaper insurance premium.

10

The theft rate influences the price of insurance

Truth. As you can imagine, no insurer is in the market to lose. If, in a certain region, a wave of car thefts lowers the company’s profit by having to pay a lot of compensation, drivers who take out insurance for the same area will be penalized with higher premiums.

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