Myth #1: Every accident will raise your premiums.
It is actually possible to be in a car accident, get damage repaired and still pay the same premium. Accidents for which you were found 100% not-at-fault are not likely to affect your insurance rates at all, largely because your insurance company is not likely to have to pay for any damages; it should be covered by the at-fault party’s insurance.
Myth #2: Red cars are more expensive to insure.
Color by itself is not actually a criterion used to determine car insurance premiums. However, the cost of insurance is determined by several factors, including likelihood of theft. If a specific color of car is more likely to be the target of auto theft, then the color of your car could impact your rate. But even in such a case, premiums are not likely to be significantly higher; there are, after all, more important factors affecting your insurance rates, such as your driving record, make/model and age of the vehicle.
Myth #3: If a friend driving my car gets into an accident, their insurance will cover the damages.
In most places, the primary insurance is that covering the vehicle involved in the accident. So, if your friend got in an accident in your car, your insurance is the one with whom the claim needs to be submitted first.
To ensure your coverage extends to other drivers, ask your agent. Many insurance policies state that anyone who has been granted verbal permission to drive your car is covered, but other policies may limit coverage to listed drivers/policyholders. If you’re not sure what your insurance covers, check your declarations page or talk to your insurance agent.
Myth #4: Your credit score has no bearing on your insurance premium.
You don’t have to have credit to get car insurance, but if you do have credit history, it may impact your car insurance premiums. Policyholders with a record of making timely payments and limiting debt-to-credit ratios may enjoy lower premiums than those who, at least on paper, look like they present a higher risk for non-payment.
Myth #5: There’s no reason to get comprehensive coverage for any car that’s more than 5 years old.
The age of your vehicle is not best criterion on which to determine if you should only get mandatory minimum insurance coverage or opt for comprehensive and collision coverage. A better rule of thumb is if your vehicle is worth less than $1,000 or 10 times your insurance premium. So, if you are paying $600 semi-annually, you may be better served getting full insurance coverage if your vehicle has a resale value of $6,000 or more.