Myth Vs Reaility
A lot of rumors and misconceptions get tossed around about car insurance. To help you separate fact from fiction, we compiled a list of myths and realities, complete with explanations about why they're true or untrue.
Myth
Red cars cost more to insure.
Color is not a factor used to calculate insurance rates - we don't even ask you what color your car is when you get a quote from us. Factors that do matter are the year, make, model, body type, usage, engine size and age of your car, as well as drivers on your policy.
One speeding ticket will make your rates go up.
Sometimes this is true, but in many cases, you have to get two tickets before your rate goes up. Whether your rate increases also can depend on your driving history, the length of time you've been insured with a company and how fast you were going when you were cited. Several factors are considered when reviewing rates, so if your rate increases, a speeding ticket may not be the reason.
Insurance companies can charge what they want.
Insurance companies calculate rates, and they do not deviate from that experience rating. Rates vary among companies because they're based on each company's actuarial data and the cost of doing business.
I only need the bare minimum amount of insurance.
Compulsory Third Party is the minimum insurance requirements, but basic insurance may not cover all of your costs. If you cause an accident that results in a lawsuit and your insurance limits don't cover all of the damages, your assets could be pursued.
Cheaper cars cost less to insure.
If your cheaper car has a large engine, weighs a lot or is an unusual model, it might cost more to insure than a more expensive small car. However, if you have a cheaper car, you will pay less for Comprehensive coverage, which covers your own damages.
If someone driving my car causes an accident, I won't be held responsible.
It's possible you'll be financially responsible for an accident - even if someone else is driving your car. The insurance policy covering the vehicle is considered the primary insurance, which means that the insurance company for the vehicle must pay for damages caused by an accident.
Older cars are cheaper to insure.
Insurance rates for all vehicles vary depending on several factors, such as who drives a vehicle and its annual mileage. For older vehicles, many drivers choose to carry only Third Party Liability coverage, which covers injury or damage to other people or property, not damage to the insured person or vehicle. Liability only coverage may be cheaper than insuring a vehicle with Third Party Liability and Comprehensive coverage.
My rate will be higher if I'm a smoker.
Your car insurance rates will not be higher if you smoke - we don't even ask you if you're a smoker when you get a quote from us.
My rates will be similar to my neighbor's rates.
Rates are determined based on the individual, so factors such as age, driving record, type of vehicle and marital status are considered. Each person's situation is unique, and rates will vary because of this.
Reality
Hail and fire damage is covered by Comprehensive coverage only.
Comprehensive coverage extends to damage resulting from vandalism, hail, fire or animal accidents, such as hitting a Donkey. If you hit another object or car, Third Party coverage applies.
An accident can make your rates go up, even if it's not your fault.
Accidents that are your fault have a direct effect on your rate, while accidents that are not your fault might cause us to place you in a group of customers that receives higher rates.
Rates generally decrease at the age of 25.
Based on data we collect and analyze, drivers have lower claim frequency and Severity when they reach age 25. Because of this, rates generally decrease when drivers turn 25.
You will group me with people you think share my risk characteristics.
Common practice in the insurance industry is to rate drivers based on data we collect for other drivers who share similar characteristics, which overall is a solid predictor for insurance rating.
Anyone who drives my car with my permission is covered if I have insurance.
If the person who drives your car doesn't have insurance and causes an accident, you could be held responsible for the damage, which will make your rates go up.
You use my credit rating when determining my rate.
We order your credit history, as studies have shown that a person's credit is correlated with and is a fair indicator of future loss potential - drivers with good credit tend to have fewer claims than drivers with bad credit.
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