Dispelling Five Falsehoods About Auto Insurance

By Mike Heuer

Driving a vehicle legally in every state requires having at least some level of liability insurance coverage in place. And if that vehicle is financed, an even greater amount of protection is needed so the lender will know the loan can be paid off in case there is an accident, the car is stolen or some other unfortunate event occurs and results in a total loss.

The first falsehood many people associate with auto insurance plans is the notion that any damage to an insured car is covered. In fact, various types of coverage only provide some levels of protection. Liability plans only protect other people and their vehicles and property. Comprehensive policies will pay the costs minus any deductibles for damage to the insured auto from perils caused while it is parked, and a collision plan will pay for damages arising from an accident while driving. For full coverage, both plans must be applied.

Another critical falsehood is the idea that even full coverage plans will protect a vehicle while used for any purpose. In fact, unless a commercial policy is bought, only personal use is covered while driving and not any uses for commercial or business purposes. People who deliver pizzas, newspapers, transport groups of people to church on Sundays and other similar activities are considered to be engaged in a commercial activity while doing them, which requires commercial auto plans. If involved in an accident while on what an insurance company considers to be a business activity, the insurer very well might disapprove any claims arising from damages caused while engaged in a commercial pursuit even if money is not exchanged.

A third falsehood is the thought that older folks must pay more for their policies. But the fact is, older drivers over age 55 who successfully finish a driving course for mature drivers designed to enhance their skills and prevent accidents can get an up to 10 percent discount from many auto insurers. So long as they have good driving records and affirm their abilities to safely operate their cars, elderly people often prove to be good risks for insurers.

Another falsehood regarding costs is the notion that military personnel must pay higher rates to cover their autos. Instead, members of the military typically have lower rates in part due to the fact many do not drive nearly as much as other people to get to work, go to the grocery store and other common activities in which civilians engage. And a military base is one of the most secure areas to park a vehicle, and that makes military personnel very good risks for insurers.

The final falsehood is the idea that red vehicles cost more to insure due to the notion they are involved in more accidents and are ticketed more often. Federal studies show grey vehicles in fact are involved in more accidents, particularly during twilight hours. There is no proof any one color results in more tickets for drivers, and insurers never base rates on the color of any auto.

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