The Top 7 Myths About Car Insurance
Did you know that comprehensive insurance means you’re covered to drive any car in any location at any time? Or that people over 25 always pay less for car insurance than younger, less experienced drivers?
Both of the above statements have two things in common: they’re common beliefs among car owners, and they’re both completely untrue.
There are lots of myths when it comes to car insurance, from small mistruths and misunderstandings to completely false information. Many people make important decisions about their insurance based on these common but untrue myths.
From misinformation about what is and isn’t covered under a comprehensive car insurance policy to misconceptions about age and the cost of insurance, read on to learn the truth about the seven most common car insurance myths.
The cost of car insurance usually decreases with age, but only if you drive responsibly.
Third party insurance is always cheaper than comprehensive
Since third party car insurance covers far less than comprehensive insurance, it’s only natural to assume it’s always cheaper. But this isn’t always the case – despite third party insurance usually being cheaper, it can sometimes be more expensive.
In many cases, comprehensive car insurance policies are available for around the same amount – or, in some cases, even less – than third party policies. By using an online tool to compare policies, you’ll be able to find the best insurance deals.
Remember that insurers look at a wide range of characteristics, from your driving experience to your vehicle, when calculating your policy. Third party car insurance might be cheaper from some companies, but not necessarily from all of them.
To get the best price, you should go direct to the insurance company
Just like the third party insurance myth, it makes financial sense that going straight to the insurance company – instead of purchasing through an insurance broker – is the ticket to a cheaper policy.
Like most car insurance myths, this “fact” is only half true. In most cases, you’ll save money by going directly to a car insurance company. However, an insurance broker might have access to deals that the insurance companies don’t advertise publicly.
It’s important to keep in mind that insurance companies need to pay to market their policies, and that these marketing costs are built into the price of your car insurance itself. Going indirect and buying through a broker might let you secure a lower rate.
There’s nothing wrong with falsely listing a parent as the main driver
This alarmingly common practice is often used by young drivers who are concerned about the high cost of insurance. Instead of listing themselves as the main driver of a vehicle, they list a lower-risk driver like a parent or guardian.
The goal is to access a less expensive policy. While this practice might seem easy and risk-free, it’s actually illegal and, if successfully prosecuted, can lead to a prison term for both the young driver and the “low-risk” insurance policy holder.
Lying about the main driver of a vehicle is illegal. While it may seem like a good way to reduce the cost of car insurance, the consequences are serious if your insurance provider finds out about the real way that your vehicle is used.
I've should of gotten my car under my parents name so it could of been cheaper for the insurance.— Wvaldo Juarez (@JuarezCorona53) May 7, 2015
The older your car is, the less you’ll need to spend on car insurance
A common insurance-related belief is that older cars cost less to insurance than new cars. At first glance, it makes sense. Older cars tend to be less valuable than new cars and should, as a result, cost less to insure.
While older cars typically cost less to replace than newer cars, they aren’t always a cheaper option to insure. Since old cars are more likely to be targeted by thieves, it can sometimes cost more to insure an old vehicle than a new one.
Likewise, some old cars are significantly more powerful than new cars, resulting in higher insurance costs for young drivers. In many cases, a smaller, more economical and less powerful car will cost less to insure than a bigger, older vehicle.
If you have comprehensive insurance, you can drive any car safely
While some comprehensive insurance policies provide coverage for every car that you drive, not all do. If you frequently drive other people’s cars, you should check with your insurance provider to make sure you’re actually covered.
Some comprehensive insurance policies provide third party coverage for other cars, while others provide full coverage for any vehicle. This can vary from one policy to another based on a range of factors.
One factor to consider is your age. If you’re under 25 years of age, most insurance policies – even comprehensive insurance – won’t provide coverage for other cars, leaving you at risk if you’re involved in an accident.
Loyalty to one insurance company always means lower policy prices
Wouldn’t it be great it customer loyalty was always rewarded? While many people think that being loyal to your insurance company is the key to lower rates, you may be able to save money by switching to another insurance provider.
This is because car insurance companies calculate the cost of a policy using several factors, one of which is the value of a new customer. In order to fuel new customer acquisition, some companies offer heavily discounted rates.
This means you could save money by price-shopping and comparing a selection of car insurance providers. As a new customer, you’re a valuable asset for them – one they’ll often be willing to offer a better rate.
The older you are, the less you’ll need to spend on car insurance
While the cost of car insurance does typically decrease with age, it isn’t age alone that determines how much you’ll pay for insurance. A variety of factors are used to calculate your insurance cost, most of which revolve around accident frequency.
Since older drivers are less likely to have accidents than younger drivers, they’re usually rewarded with cheaper insurance premiums. But if you drive dangerously and frequently have accidents, your rates will probably increase as you get older.
This is because your claim history will start to work against you by creating a clear profile of dangerous or risky driving. Drive responsibly, however, and you’ll enjoy lower car insurance premiums as you become older and more experienced.
Thanks for reading. Make sure to stay tuned to the Warrantywise blog, Facebook and Twitter for more great content throughout 2015!