Car Insurance - Misconceptions
Misconception - Red cars are more expensive to insure.
Car insurance companies do not use color to calculate rates. Information that is used includes the vehicle’s year, make, model, body type and engine size, and driving record, claims history, and credit history of the owner.
Misconception - Personal insurance covers me while I deliver pizza or newspapers.
If you use your car for anything but going to and from work, school or personal use, you will probably need to specify that your personal auto policy cover business use of the car. If the carrier discovers you were engaged in commercial activity, they may or may not cover the damage.
Misconception - Comprehensive insurance covers the car against all damage.
Comprehensive car insurance only pays for damage caused by an event other than a collision, such as fire, theft, or vandalism; it also covers weather-related damage (e.g. hail, flood), damage caused if a vehicle collides with an animal and provides a rental car if a vehicle is stolen. Comprehensive coverage doesn't cover damage caused by a collision, or an uninsured motorist.
Misconception - Insurance carriers raise rates whenever they want.
The insurance lobby is very powerful and contributes millions to different politicians. However, each state has a regulatory body that oversees insurance companies. Regulators who review the information companies collect as well as the rates they charge; insurers cannot deviate from these rates.
Misconception - Getting auto insurane coverage from my homeowners carrier will save money.
There is a multi policy discount, however, many companies make up for low margins on auto insurance by charging more for homeowners and vice versa. Companies can vary wildly in prices based upon their loss history and underwriting. The multi policy discount may or may not make your auto insurance cheaper.
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