We’ve all opened our auto insurance renewals lately and thought, “Is this right? Why am I paying so much?” But according to the Insurance Information Institute, a few common beliefs may be increasing your risks—along with what you pay in premiums.
Fake facts can hurt your wallet. Here’s what does determine your auto insurance—and one thing you can do to save money today!
Myth or Fact: Red cars cost more to insure.
Drive a “ticket me red” speedster? Color doesn’t affect your premium, but make, model, body style, and engine size do. So yes, a Mercedes (average full-coverage cost of $4,505 annually) will be more expensive to insure than a Toyota ($1,964 per year). Interestingly, age plays a factor, but not how you might think: Older cars that are harder to repair or lack safety features may cost more. Myth.
Myth or Fact: Your finances don’t matter if you pay your premiums on time.
Auto insurance is tied to a credit-based insurance score. A bad driver with a great credit score may pay less than a good driver with a low score. Insurance companies consider your credit score a predictor of behavior, like whether you may file a claim or not. Myth.
Myth or Fact: If another person drives and wrecks your car, their insurance will cover damages.
Nope. Many people assume a driver’s auto coverage follows them. In most states, it’s the vehicle’s coverage that’s primary. Myth.
Myth or Fact: Insurance costs less as you get older
Auto insurance rates tend to drop as you get older, with many seniors eligible for significant discounts, like credit for safe driver courses. Fact.
Myth or Fact: Your insurance covers your car from falling tree limbs, floods, fire, and other damages.
Only if you add comprehensive and collision coverage to your standard state-minimum liability protection. Myth.
DO NOT skimp on uninsured and underinsured coverage. The difference may be only a few dollars. But if you can’t cover the damage to the other person’s vehicle, a lawsuit against you is likely to result.
Staying with an insurance company for a long time doesn’t necessarily help your rates. It’s a good idea to shop your coverage at least every other year. That way, you make sure your premiums are still competitive and your coverage “right sized” for your needs. Mercer Indigo can help you shop for affordable plans and keep you informed. Plus, on-staff experts are at hand to help you know what you need in your state.