Feb. 25, 2011 — The Insurance Information Institute (I.I.I.) recently debunked eight common myths about auto insurance costs and coverage to help consumers save money.
Many different factors can make an insurance premium higher, according to I.I.I., but not these:
Vehicle color. It doesn’t matter if your car is grandma beige or racecar red, its color will not make a difference when it comes to insurance. “The fact is, insurers have no interest in the color of a car,” said Loretta Worters, vice president of I.I.I. “But they are interested in knowing if you have had any previous car accidents, the number of miles you drive annually and where you live.”
Old age. The cost of insurance does not increase as a driver ages. Many drivers over 55 can actually qualify for discounts.
Credit. Your credit has no impact on your insurance rate, but your credit-based insurance score does matter. Many insurance companies take that score into consideration when you want to purchase, change or renew your auto coverage.
Military service. Soldiers do not pay more than civilians for insurance. All branches actually qualify for a discount.
As far as coverage goes, the I.I.I. said the following factors are commonly misunderstood:
Vandalism, fire and storm damage. Comprehensive and collision coverage are optional and if a vehicle is worth less than $1,000, those options might not be cost effective. But both coverage types are needed to fully protect a vehicle from all types of damage.
Minimum insurance. The state minimum for liability coverage might not be enough, because accidents often cost more than the minimum limits. The insurance industry and consumer groups generally recommend a minimum of $100,000 of bodily injury protection per person and $300,000 per accident.
Other drivers. If someone else is driving your car, don’t bank on that person’s insurance covering them if they get into an accident. In many states, the insurance company for the vehicle has to pay for damages caused by an accident.
Vehicle use. If you are self-employed and use your vehicle for business, personal auto insurance might not cover you. Business-oriented auto insurance can be spendy, but a good driving record can keep rates down. Other drivers of company vehicles should also have good records and you should check them twice a year.
For more insurance information, go to iii.org.
