We’ve all heard the urban myths about silly car insurance accident claims. You know, where the people write things like “I was driving through an intersection when a stop sign appeared suddenly and I was unable to stop in time to avoid the other car” and “I had been driving for 20 years when I fell asleep and ran into a pedestrian.” Good for a laugh. But unlike that funny stuff, common myths people have about car insurance are no laughing matter. Not knowing the facts can cost you a lot of money. Let’s clear up some of the misinformation about car insurance.
1. If you have comprehensive auto coverage, you’re covered for every possible accident and damage.
Nope. Comprehensive car insurance will take care of lots of things but the specifics will depend on your policy. Typically, comprehensive insurance pays for damage or loss caused by things other than a collision, like fire, bad weather, running into an animal, vandalism and theft. It does not pay for damages caused by an accident. For that you need collision insurance. Word to the wise: always read your policy’s exclusions and limitations. Otherwise you may be unpleasantly surprised. And, by the way, if you owe money on your car, if it is totaled in an accident, most comprehensive policies will only pay the blue book value.
2. The older your car is, the cheaper your car insurance will be.
Not always so. Your car insurance premiums will depend on all kinds of things including (but not limited to) what kind of coverage you have, your driving record, your age, the miles your drive every year and the reason you drive. In general, if you’re driving an older car, you may not want to pay for optional comprehensive and collision, choosing instead to take just the minimum car insurance your state requires you to carry.
3. Your insurance will cover you if a friend wrecks your car.
Again, it will depend on your specific policy, but usually it will not. However, if your friend has his or her own car insurance, it may cover damages that go beyond your policy limits. What is certain is that the accident will go on your claim history and might result in higher premiums at renewal time.
4. Since you live in a no-fault state, you are never at fault.
Dream on. As a general rule, no-fault simply means your car insurance company will pay your medical bills up to the limits of your policy no matter who caused the accident.
5. You’re an excellent driver, so you don’t need car insurance.
Almost every state has minimum requirements for car insurance. And the penalties for getting caught driving without it (especially if you’re in an accident) can end up costing you more than a basic car insurance policy.