There are a lot of myths and misinformation surrounding car insurance.
Allow us to debunk the biggest car insurance myths, especially the most common: Do red cars cost more to insure?
If you’re licensed to drive in the State of Florida, you’ve probably had some questions about your car insurance.
“Do I have enough coverage? What does “No-fault” insurance mean? Do red cars cost more to insure? What happens if my brother-in-law wrecks my car?”
We understand the confusion. There are a lot of myths, lies, and misinformation swirling around about an already baffling subject. But at Harry Levine Insurance, we believe that knowledge is power, so we collected (and debunked) the top 10 car insurance myths so you could be sufficiently informed.
Myth #1. Comprehensive coverage covers everything.
Unfortunately, a lot of people are under the impression that, as long as they have “comprehensive” coverage on their auto insurance policy, they’re good.
The dictionary’s definition of “comprehensive” is a lot different from the insurance industry’s. When it comes to your car insurance policy, comprehensive (or “comp”) coverage only applies to damage and/or loss that was not caused by a collision.
So if you were in a collision with another car, mailbox, fire hydrant, or any other object, you would turn to your collision coverage. Anything else (i.e. fire, vandalism, theft, falling objects, flooding, etc.) would fall under comprehensive coverage.
Comprehensive also doesn’t cover medical or legal expenses in the event you’re injured or cause someone else to be injured in an accident.
Truth: It’s an important form of protection to carry on your car insurance policy, but it doesn’t provide all the coverage you’ll ever need.
Myth #2. “No-Fault” insurance means it’s not my fault.
If you’re licensed to drive in Florida, you’re probably aware that Florida is one of seven No-Fault states in the country. But what does “No Fault” mean?
No-fault laws apply specifically (and only) to Personal Injury Protection, or PIP, coverage. PIP coverage is responsible for paying a certain percentage of your medical bills and lost wages—as well as death benefits—in the event you are injured in an auto accident.
Under a true no-fault system, a certain amount of PIP coverage (in Florida, the minimum is $10,000) is mandatory for all licensed drivers. If you are injured in an accident, each driver would turn to his/her own insurance company to cover medical bills and lost wages.
Damages to your car and personal belongings, however, do not fall under the no-fault system. If you are found to be at-fault for the accident, you (more specifically, your insurance company) would have to cover 100% of the damages experienced by you as well as the other driver. If you were found to be 10% responsible, they would pay 10%.
Truth: PIP coverage is extremely important to protect yourself and your passengers in the event of a crash, but “No-Fault” insurance won’t reimburse you for property damage.
Myth #3. Red cars cost more to insure.
It’s one of the most frequently asked questions that insurance agents hear (and one you’ve probably asked yourself): “Do red cars cost more to insure?”
But the truth is that neither your car’s color, size, or value are guaranteed to raise (or reduce) your insurance premiums.
Insurance premiums are based on data that your insurance company collects from a long history of writing policies. And the factors that correlate to higher claims rates are counterbalanced with higher premiums.
Each insurance company has their own data but, typically, they tend to rely mostly on safety and replacement costs to calculate your insurance premiums. An older car with hard-to-find parts that lacks the most updated safety features will likely cost more to insure than a red 2019 Hyundai sedan.
Truth: Color has little to no affect on car insurance premiums.
Myth #4. If I’m at-fault, my insurance company will cancel my policy.
State laws prohibit your insurance company for cancelling you mid-policy simply because you got into an accident. That’s what your insurance policy is designed for!
However, this myth does carry a nugget of truth.
Your insurance carrier can cancel your policy for a grievous infraction, such as not paying your premiums, license suspension, or fraud. They may also choose not to renew your policy if you’ve had too many claims within a certain time span.
If this is the case, you will receive notice so you can have time to purchase another policy with a different carrier.
Truth: Unless they have a valid reason, your insurance carrier cannot cancel you mid-policy. They can, however, choose not to renew your policy.
Myth #5. If my friend crashes my car, their insurance will cover the damage.
Your car insurance policy is on your car, not you. So, whether he borrows your car or you borrow his, the owner of the vehicle would turn to their insurance to cover the damage.
This is a great reason to avoid letting your friends and family members operate your vehicle, particularly if they are unsafe drivers. Don’t let their bad decisions affect your policy!
Truth: Your car is covered by your own insurance policy, regardless of who is driving it.
Myth #6. I have an older car, so I don’t need theft coverage.
Older cars are actually stolen more frequently than newer models. Older cars tend to have less security systems in place, making them much easier to steal than that brand-new Lexus…and criminals know it.
Remember, thieves are looking for easy money, not necessarily the most money. And it’s a breeze for them to break into an older car and scrap it for parts. Sure, your 1998 Toyota Corolla might not be worth much according to Kelly Blue Book, but it’s worth enough to thieves and it’s worth enough to you to get adequate protection.
Truth: Older cars are frequently stolen, so your coverage shouldn’t discount this possibility. If an older car still has monetary value, good comprehensive coverage can be a cost-effective way to protect against theft.
Myth #7. The personal items inside my car are covered by my car insurance.
Theft of personal items is actually covered by your home or renter’s insurance (one of the many reasons why renter’s insurance is so important!).
If the personal items in your car were damaged in a car accident caused by you or someone else, they may be covered by your car insurance policy, but you’d have to check your policy verbiage to be sure.
Truth: Theft of personal items from your car is covered by home or renter’s insurance.
Myth #8. Business use is covered under my personal auto policy.
There are exceptions to the rule, but generally speaking, your personal car insurance policy does not cover damages and/or losses to your vehicle that occurred while you were working.
If your car is registered under a business name or you frequently use it in your line of work (i.e. delivering equipment or visiting job sites), you will need a commercial auto policy.
You can read more here: What’s the Difference Between Personal and Commercial Auto Insurance?
Truth: Personal and commercial auto insurance are completely different policies and rarely overlap.
Myth #9. My driving record is the only thing that affects my insurance rates.
While your record of traffic accidents and violations are considered when calculating the cost of your car insurance premiums, they are not the only determining factor.
In addition to your vehicle, insurance carriers also look at your insurance score.
Your insurance score is a number ranging from 200 to 997 that represents an individual’s likelihood of filing an insurance claim. To determine your insurance score, insurance companies examine your claims history, credit score, and other factors (such as your age and marital status).
Your location matters greatly too. Rates often vary by zip code and are determined by both the number and cost of claims in your area. Yup, your neighbors affect your insurance rates, too!
Truth: Insurance companies give you an insurance score, which is used to calculate your car insurance rates.
Myth #10. I only need the minimum amount of coverage required by law.
If you take nothing else away from this article, let it be this: Florida’s minimum car insurance requirements are not enough to adequately protect you.
Under Florida law, you are only required to carry a minimum of $10,000 in PIP coverage (which covers medical expenses and lost wages) and $10,000 in Property Damage Liability coverage (which protects against damage that you cause to another’s property).
If you are severely injured in an accident, that $10,000 may not last very long and $10,000 in property damage is barely enough to pay for a decent used car nowadays.
Not only do the legal minimums provide too-little protection, they’re often more expensive. Insurance companies believe that people who are willing to protect themselves with better coverage are less risky than those who don’t.
Truth: We’ll say it again: Florida’s minimum car insurance requirements are not enough to adequately protect you.
As Orlando’s population continues to boom, car accidents will probably become even more common. And that only makes proper insurance coverage more essential.
Car insurance myths can be dangerous, as they often cause people to purchase less coverage than they truly need. And the fact that people are still asking “do red cars cost more to insure?” means that we still have a long way to go toward educating people on the things they really need to know about their car insurance.
At Harry Levine Insurance, our goal is to educate our clients so that they feel confident enough to make informed decisions about their insurance coverage. If you find yourself in the unfortunate experience of having to file a claim, your experience will only be as good as your insurance policy, so it’s important to get the right level of coverage upfront.