5 Myths About Car Insurance

by Sabah Karimi on 6 December 2011 7 comments

Picking out the right type of insurance can be complicated enough, so make sure you’re not believing one of the many car insurance myths when making your final decision. Here are five myths about car insurance, debunked. (See also: 6 Mistakes to Avoid When Shopping for Car Insurance)

1. Expensive Cars Command Higher Insurance Rates

While it’s true that sports cars and luxury vehicles that have a higher risk of being broken into or stolen typically cost more to insure, the fact that these same cars are more expensive really has nothing to do with the insurance rates. Your insurance company will take your vehicle’s loss history, how much it usually costs to repair your vehicle, and several other factors into account when calculating your insurance rate. If you live in a high-crime neighborhood and drive your expensive car long distances on a daily basis, you can expect to pay a higher-than-average insurance rate.

2. Since I’m a Female, My Insurance Rate Will Be Higher

Even though statistics show that female drivers are more likely to get in a car accident than their male counterparts, insurance companies don’t use this as a factor when determining insurance rates. What they do consider is the woman’s driving history, the type of vehicle she’s driving, and how much she drives — just like they do with their male customers. There is no difference in insurance rates based specifically on gender. You just need to make sure you have a clean driving history and are reporting your annual miles accurately to qualify for a better rate.

3. My Insurance Company Will Pay for Property Stolen From My Vehicle

Personal property, including cell phones, handbags, laptops, e-readers, and any other types of electronics are not covered under an auto insurance policy. In some cases, these items will be covered by your homeowners insurance policy, but you will need to file a separate claim. Remember to remove all pricey personal items from your vehicle and always keep them well out of sight of any passersby. These can be a costly loss on your end and in some cases, can also compromise your identity.

4. I Already Paid for Insurance, So I Don’t Need to Buy Another Policy for My New Car

You will always need to get an entirely new policy when you insure a different vehicle. Even if you own an insured vehicle but aren’t planning on driving it, or you just paid for insurance on an old vehicle and decided to buy a different vehicle, your insurance company will need to run the numbers based on your new car’s VIN and issue you a new policy. Your old policy can be canceled until you stop driving the car or authorize no coverage, or you can continue coverage until you sell the vehicle. Make sure you go over these details with your insurance agent and always inform them when you are making a new car purchase.

5. My Red Car Commands Higher-Than-Average Insurance Rates

This myth has been around for decades. Insurance companies don’t take the color of the car into account when determining insurance rates but will take the make and model of the vehicle, how often you drive the car, and your driving history into account. The fact that your vehicle might be a red sports car instead of a red family sedan could have an impact on your insurance rate, because the sports car may be at a higher risk of being vandalized or stolen. So, if you want to get that red car you’ve had your eye on all these years, go ahead and do it without worrying about a drastic increase in insurance. Your final insurance rate will be determined by several other factors.

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Meg Favreau's picture

I'm gearing up to buy the first car I've owned in five years, and I'm glad to know that being a lady won't increase my rates. Just buying a car and insurance is expensive enough already!

Guest's picture

It is more expensive for males when they are younger but then quickly changes to being more expensive for females for the rest of there lives. Young males get pretty crazy when we first get that freedom.

Guest's picture
Sara Anderson

Being an insurance agent in MA, I can tell you that you are pretty accurate on these myths except for the Myth #4. You can replace the vehicle on your current insurance policy in MA and not have to start a new policy. You can also add the vehicle to your current policy if you intend on keeping the older vehicle. Lots of policies have up to 4 cars on them, Peerless insurance allows 8 vehicles on a policy. So what you need to do is ask your insurance agent. Call them, say hey I am getting a new car what do I need to do... they will walk you through it.

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Ins. Guy

Expensive cars do get higher collision and other than collision rates. The initial physical damage rating symbol for a given model of vehicle is based on cost. That symbol is then adjusted up or down based on experience for that vehicle over time. The cost of the vehicle does not effect the liability coverages.

If you are a female your insurance rate may be higher. If you are single your insurance rate may be higher. This varies by company though. Some companies use rating classes based on age/gender/marital status. A single female of a given age might be charged the most while a married female of the same age could be paying the least.

Guest's picture

As for #3... if you have a certain type of comprehensive coverage, your insurance policy actually WILL cover stolen items from your vehicle.

Guest's picture

Consumer credit scores are now being used frequently to better determine auto insurance rates. These scores have proven to be more effective in predicting future claims experience than some of the traditional criteria mentioned in the article.

If you score reflects responsible use of credit, you may also enjoy more affordable rates on auto coverage, and homeowners insurance also.

Guest's picture

I don't think that #1 is a myth at all. On average, luxury cars are much more expensive to insure than "economy" cars. If you look at any of the lists of "most expensive cars to insure" you will see a bunch of Mercedes, Proches, etc... you won't see Dodge Neons!