Driving is a convenience that does not come without responsibility. Auto insurance is mandatory in every U.S. state, adding to the cost of car ownership. Everyone seems to have their own tips for snagging low insurance premiums. But some of these ideas are based on rumors that are simply untrue. So what are some of the most common myths about buying auto insurance buzzing among drivers today?
Myth: Personal insurance covers me while I'm operating my own vehicle for business purposes.
Truth: Your personal coverage is designed to provide coverage while you are driving for leisure, personal reasons, or when you are commuting to and from work. If you regularly operate your vehicle for job-related reasons, such as to haul supplies or meet with clients, you may need separate commercial auto insurance.
Myth: Personal finances do not affect insurance rates.
Truth: Although your insurer does not care how much money is in the bank, you may be evaluated for coverage based on your history of managing your finances. Insurers have found that low credit scores are associated with a higher risk of claims and a higher average claim value. For the best rates, keep close watch on your credit score.
Myth: As long as I have at least the state-minimum insurance coverage, I am protected from personal liability in an accident.
Truth: This could be the most costly auto insurance myth of all. Each state establishes a minimum amount of liability coverage that each driver must have. Though minimum coverage satisfies state requirements, it does nothing to limit your financial liability in an accident. If, for example, you are at fault for an accident and are sued for property loss and bodily injuries, you are still on the hook for any judgment or settlement not covered by your insurance policy.
Myth: I have "full coverage" insurance. I'm covered for any circumstance.
Truth: One of the most important things you can do is find out the types of events your insurance covers. "Full coverage" is a frequently used term, but is not an actual type of coverage. So while you may have liability, collision, and comprehensive protection, your policy may be lacking in other types of coverage, such as uninsured motorist protection or reimbursement for emergency roadside assistance or rental cars.
Talk to an Agent
Auto insurance misconceptions hold many people back from getting the coverage they need. Never make assumptions about your auto insurance coverage without first contacting your agent. What you don't know — or what you assume — could cost you hundreds, if not thousands of dollars. Talk to your agent to verify anything you've heard about insurance coverage.