No one likes paying for car insurance, but it’s an essential expense in modern life. While the cost can be prohibitively expensive, it’s necessary to know what you’re paying for and not fall prey to any of the most common myths about car insurance that prevent people from understanding what they need and what they don’t.
In this guide on misunderstood things about car insurance, we’ll debunk ten common myths and show you how to protect yourself correctly to ensure you have the best policy possible while staying within your budget.
Myth 1 – Liability Only
If you only have liability coverage on your vehicle, you won’t be protected if someone damages your car or injures themselves in an accident. Buy comprehensive and collision coverage if at all possible.
Comprehensive protects your car from natural disasters and theft. Collision covers damage to your vehicle caused by an accident. If you can’t afford both, buy comprehensive and call your insurer after a wreck or natural disaster to see if they can wave collision coverage for that year. When it comes time to renew, see what they will do then – don’t cancel collision unless it’s necessary!
Myth 2 – State Farm only
It’s not true that you can only get car insurance from State Farm. Although it is one of the most widely known and trusted brands in car insurance, many companies are reputable enough to cover your vehicle.
Be sure to research other providers in your area before deciding if you only want State Farm. This will give you a better idea of how much insurance will cost you and what level of coverage is offered by different providers.
Myth 3 – Comprehensive coverage doesn’t pay for the other car.
A Comprehensive car insurance policy will pay for damage to your car, but only if you’re at fault. If it wasn’t your fault (someone else sideswiped you, etc.), then your comprehensive policy should cover damages to that other driver’s vehicle (minus any deductible). If you have collision coverage, it should also cover damage to that other driver’s car.
For comprehensive coverage to kick in, however, many conditions must be met. The other person must be driving without insurance; they must be at fault (meaning you weren’t), and their vehicle can’t have been stolen or vandalized before impact.
Myth 4 – Using an agent is unnecessary and expensive
Well, it’s not superfluous, but it certainly isn’t expensive. Using an agent can save you hundreds of dollars per year in premiums. Agents are highly trained professionals who have access to information about insurance companies that consumers do not.
They work for you, and most people I know who have used them for a decade or more don’t regret it one bit!
Myth 5 – The deductible is how much you have to pay out of pocket before your insurance company starts paying
The deductible is often misunderstood as how much you have to pay out of pocket before your insurance company starts paying. In truth, it’s a term used to describe how much you’ll pay for certain things on your car insurance policy.
For example, if your collision coverage has a $1,000 deductible, you will be responsible for $1,000 of repair costs after an accident regardless of who was at fault. The deductible only kicks in once that amount has been met. So if you hit another driver in an accident and require $900 worth of repairs while your vehicle needs $100 worth of repairs, you will still pay all expenses until your deductible is reached.
Myth 6 – I don’t need anything more than liability coverage
No-fault insurance covers most costs in a car accident except for your deductible. You should always have collision and comprehensive coverage, regardless of your state, because there will be accidents that you do not cause. If you don’t have full range and hit a deer or get into an accident with a driver who doesn’t have auto insurance, that could lead to higher medical bills than your no-fault coverage.
It is also essential to consider that if someone else hits your car and causes damage, your no-fault won’t cover those damages. If a tree falls on your roof or another property-related damage is caused by weather-related events or vandalism, then again, no-fault does not cover all costs associated with these losses.
Myth 7 – If I get in an accident, my no-fault will cover everything
This is an oft-repeated myth. In no-fault states, your insurance company will pay for your accident-related expenses and lost wages up to a certain amount. That’s it. Your no-fault benefits are capped, and these caps can vary by state. For example, in Michigan, car insurance policyholders are entitled to $500 of personal injury protection benefits per person, up to $2,500 per accident.
If you’re involved in an accident with two people and your bill comes out to $10,000 after bills have been paid by insurance companies (and not you), you’ll still owe $5,000 out of pocket.
Myth 8 – If I have UM/UIM, my insurance company will provide a lawyer to represent me in court
Some insurance policies include Uninsured Motorist coverage and Underinsured Motorist coverage. If you have one of these coverages, your insurance company will provide a lawyer to represent you in court if you get hit by an uninsured driver who has no liability insurance or if you are hit by an insured driver who does not have enough liability insurance to pay for your injuries.
However, having two lawyers fighting for you can sometimes make things worse for your case if you have both Uninsured and Underinsured Motorist coverages. It is essential to speak with a personal injury attorney about which coverage is best for your case. It may be worth paying more on your policy to eliminate Underinsured coverage and go with just UM.
Myth 9 – I don’t need uninsured motorist insurance because I have health insurance
You need uninsured motorist insurance because it’s designed to pay medical bills if you get hit by an uninsured driver. Who pays for your emergency room bills if you don’t have UM coverage and your health insurance doesn’t apply?
You do! It also comes in handy if you get injured on a public road or highway. Without UM coverage, you’re entirely at fault. So even if you have health insurance and some emergency fund, make sure that UM is part of your policy so that in a case where the injury is unavoidable due to another person’s negligence, you won’t be left high and dry.
Myth 10 – Older drivers always pay more than younger drivers
While rates for younger drivers are typically higher, it’s not always true that older drivers pay less than their younger counterparts. The amount you pay depends on various factors, including your driving record and where you live.
You could be paying more like a senior citizen, even if you have an impeccable driving record. Some companies have policies to charge older customers more negligible, but there’s no guarantee that every insurer has them.
If you’re looking for cheap car insurance as an older driver or maybe get lower car insurance quotes as a senior citizen (70 years old or over), finding out whether your company has such policies can save you money and provide some peace of mind on your monthly premium payment obligations too!