My Insurance Policy: True or False?
This past Friday, I read a story in the San Francisco Chronicle addressing the following topic: Top 10 Myths concerning Car Insurance Companies and their Policies. The article was based off of another website which discussed 15 Insurance Policies that You Don’t Need. I found the information to be both helpful to consumers and interesting reading. You can find the entire article here: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/04/22/investopedia51773.DTL.
1. The color of my car matters: FALSE
Car insurers are more interested in the make and model, year, body style, engine size and, in some areas, location. What does count? The drivers’ behavior is one of the most important factors and outweighs almost everything else. For example, moving violations, like speeding or reckless driving that result in “points”, certainly affect the cost of premiums no matter what color the vehicle happens to be.
2. My old car won’t be a target for theft: FALSE
According to a National Insurance Crime Bureau report, car thieves preferred older models because they are easier to steal! In fact, a 2007 bureau report that listed the most stolen vehicles included a 1995 Honda Civic, a 1991 Honda Accord and a 1989 Toyota Camry. The insurance bureau’s report also suggests that thieves’ preference varies from state to state.
3. I’m covered if my car is stolen, vandalized or damaged by hail, wind, fire or etc.: FALSE
Comprehensive and collision is usually required if you’re leasing or financing your vehicle; but once the car is yours, you must request this additional coverage. Beware: thieves in California prefer Hondas, Toyotas and other imported models!
4. Credit scores don’t affect insurance rates: FALSE
Your credit score has the ability to impact just about every financial decision you or an insurer makes no matter what they tell you.
5. My insurance company can cancel my policy at any time: FALSE
Unless you give them an adequate reason to do so, car insurers can’t arbitrarily cancel a policy in the middle of a term. Grounds for cancellation may include fraud or non-payment of premiums. Look at the fine print and don’t lie on your application.
6. My friend borrowed my car, so he’s responsible if there’s an accident: FALSE
Car insurance companies tend to follow the car, not the driver. So you are ultimately responsible for an accident and any damages that occur unless your policy provides otherwise.
7. Personal property inside my car is covered: FALSE
One may file a claim through your homeowner’s (or tenant’s) policy but not through your car insurance.
8. I’m automatically covered for a rental car: FALSE
If your car is stolen or damaged, rental car reimbursement is not automatically included in your policy. This coverage can be affordable but may also be linked to your credit score and age.
9. Drivers of sports cars pay more insurance because of more tickets: FALSE
This may be true if you’re also a high-risk driver (younger than 25) or have a checkered driving history with multiple moving violations but just because you drive a hot-rod, this is not grounds for the raising of rates.
10. Having no-fault insurance means it’s not my fault: FALSE
No-fault insurance varies from state to state. Basically, it means you and the other party will be covered for immediate expenses, such as medical attention or lost wages, while the insurance companies arm-wrestle about who will pay for the accident itself. But you may still be liable for repairs and other damages if the insurance companies ultimately determine the accident was your fault.