Car Insurance Misconceptions vs. Reality

 

Buying car insurance that’s right for you can be a challenging task, especially with so many options available. You’ll have to navigate through persisting myths as well, but we can clear some of these up for you.

 

Misconception: A red vehicle costs more to insure

 

Reality: If you’re looking for auto insurance for a red car, don’t worry about having to pay more for coverage because of color. Car insurance providers do not factor in color, nor do they ask for that information. Most will, however, take into account such things like model, make, year, and engine size of your car. How many miles you drive each year, where you drive, your past accident history, and even your credit history may be used to determine coverage pricing.

 

Misconception: Car insurance will pay off my loan if my car is totaled

 

Reality: Some consumers have outstanding loan balances that are greater than the value of their vehicle; these customers may want to consider purchasing “gap” insurance (coverage that, for an additional charge, will pay the difference between your loan value and the cost to replace your car).

 

Misconception: Car insurance is “one size fits all”

 

Reality: Auto insurance can, and should be, customized to each customer’s individual needs.

 

Misconception: More expensive cars cost more to insure

 

Reality: The cost of a vehicle does influence the price of insurance but just as important are things like how costly replacement parts are, how many repair specialists there are for a vehicle, etc.

 

Misconception: Rates automatically go up after a traffic ticket

 

Reality: Getting a traffic ticket doesn’t automatically mean significant premium increases. However, not all tickets are created equal, either. The following are some premium-busting tickets you’ll want to avoid:

• DUI Reckless driving
• Careless driving
• Speeding
• Failure to stop
• Failure to yield to pedestrian
• Driving in a carpool lane

Misconception: If a friend borrows the car, he or she is responsible for damages

 

Reality: If you ever decide to let a friend borrow your car, make sure he or she is an experienced driver with a solid driving record. If they do get in a car accident, it may be your insurance that has to cover the damages.

Letting Your Child Drive Someone Else's Car

Consider several factors before you allow your kids to get behind the wheel of someone else's car — or before someone gets behind the wheel of your car.

 

With school back in session, more students will be driving to and from school during the morning and afternoon hours. Parents know they can't monitor their kids at all times, but they can work with their kids to set ground rules before young drivers hit the road. One of these rules: What cars your kids can drive. Before you let your child drive someone else's car, or before someone outside the family drives your car, consider these factors.

 

Whose Insurance Applies?

If your child's friend drives your car and wrecks it, whose insurance covers the damages? The answer varies depending on the state you live in. In most states, insurance coverage follows the car— not the person driving it — in the event of an accident. However, if damages resulting from the accident exceed the amount allowed by your policy, then the driver's insurance may be considered as secondary or supplemental insurance to the insurance on the car.

 

For instance, let's say your policy has $10,000 in property damage liability coverage. Your daughter lets her friend drive your car to her mom's house 30 miles away. In the process, she causes a three-car collision, which results in $20,000 of damage to the other vehicles and property.

 

In most states, the insurance you have on your car will cover the damage, but since you only have $10,000 of coverage, the friend's insurance policy may kick in and pay for the remaining $10,000 of damage. However, in some states, you could personally be held responsible for any remaining damages beyond your insurance limits if your child's friend doesn't have car insurance, even though you or your child weren't driving at the time of the accident.

 

It's also possible that if your insurance company pays for damage in an accident, they may pursue the friend's insurance company to pay back the damage. They won't attempt to recover any money that you pay out of pocket, though. Again, this is both situational and based on your state's laws, so there's no single answer to the question. Your best option is to check with your insurance company to find out how insurance works in your state.

 

Before your child's friend drives your car, make sure you and your child think about the following:

· Whose insurance will pay for the damage?

· Who will ultimately be responsible for paying any out-of-pocket expenses?

· If your insurance pays, are you willin  to take the risk, including possibly paying more for insurance when your policy renews? If not, you may want to rethink letting anyone outside of your family drive your car.

Should You Update Your Policy?

If you know your child's friend drives your car regularly, it may be best to add that person to your auto insurance policy. Similarly, if your child regularly drives a roommate's vehicle, it may be best to add your child to the roommate's policy.

 

Often, insurance companies may require that you add a driver or car to your policy if the person or car isn't already on it. This helps ensure that proper coverage is afforded in most situations.

Does Your Friend's Auto Insurance Policy Cover You If You Borrow His Car?

Occasionally, you may need to borrow your friend's car to run an errand, go to work or complete some other task. When you do this, do you know if you're covered by your neighbor's auto insurance policy?

In most states, the answer to whether you're covered or not depends on how much you're using the vehicle and what you're using it for.

As always, auto policies may differ by state, so be sure to check your state's policy to see how you're covered.

For states that don't require you to use your own auto insurance policy, regardless of who's at fault for an accident, here are things to consider before you borrow a friend's car.

How Often Do You Use the Car?

If you only borrow your friend's car once a month, most likely your friend's policy will cover you when you drive the vehicle. An auto policy will define who it covers, which you can find in the definitions sections. In this instance, look for the definition of an "insured person" to see who's covered.

For example, an "insured person" may include "any person with respect to an accident arising out of that person's use of a covered auto with the permission of you or a relative." Under this definition, if someone else gives you permission to drive his vehicle, you're covered by his insurance policy — as long as your other actions with the vehicle also fall within policy allowances.

How Long Do You Borrow the Car?

Another consideration is how long you're borrowing your friend's car. If you use the car for a day or two, most likely that's not considered regular and frequent use. However, if you borrow your friend's car for several weeks, you may not be covered by his auto policy. In cases like this, you most likely would be considered a regular user, which means you should be added to your friend's insurance policy if you use his vehicle in this manner.

Why Are You Using the Car?

Finally, consider why you're using your friend's car. If you're using the vehicle to conduct business, like delivering pizza or hauling equipment for a landscaping business, you'll need to make sure the vehicle is covered under a commercial auto or business insurance policy. Personal auto policies typically don't cover anyone for conducting business with their vehicles.

Auto policies have long lists of actions and circumstances that aren't covered, so make sure you check to see what's covered before you drive your friend's vehicle.