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January 10, 2012

Auto Insurance Myths

Car insurance is required in California. It protects the insured financially in the event of an accident. Car insurance is a valuable asset; however, there are a lot of myths associated with it. This article will look at common myths that many Americans believe about car insurance, and how you can protect yourself from these myths.

  • Full Coverage is a common term people use when referring to what their auto policy covers, however, it is very misleading as there isn’t a policy that coverages all accidents in full. Auto policies will include limits for the amount they will pay for damages caused to others. In addition, most auto policies will only pay Actual Cash Value in the event your own vehicle is totaled. Actual Cash Value is equivalent to the amount you could sell the vehicle for prior to the accident. It has nothing to do with what it would cost to replace your vehicle.
  • Anyone over 25 is covered to drive my vehicle. Who is covered to drive your automobile can differ from policy to policy. However, a typical auto policy will only provide coverage for individuals listed on the policy and for occasional drivers that have permission to drive the automobile.
  • Red cars have higher insurance rates. The myth began when people began to believe those with red cars were more likely to get a speeding ticket as their vehicle was easier to spot by police officers. While yes, speeding tickets can affect insurance rates, the color of your vehicle doesn’t.
  • If I lend my car to a friend and the friend wrecks my car, his or her insurance will pay. It will depend on the state you live in. Some states will require the friend driving the vehicle to reimburse the insurance company if the vehicle is damaged due to their fault.
  • I can purchase auto insurance after the accident and I’ll be covered. Insurance is designed to cover unforeseen accidents. This philosophy could be compared to buying a lottery ticket after the numbers were announced and expecting to win.
  • My loan will be paid off if my car is totaled. As mentioned earlier, most insurance policies will only pay the Actual Cash Value of the vehicle, which is defined as what the car cost new less depreciation. If you owe more money to the lender than the Actual Cash Value, you very well may end up owing on a vehicle that is no longer drivable.
  • If I have any personal property in my car, my car insurance will cover it. Auto insurance is designed to cover the automobile, not personal property in the automobile. Personal property in the vehicle can be covered on a renters or homeowner policy.
  • I don’t want to list my teen driver on my policy because I don’t want to be held liable if they get in an accident. Parents are responsible for the actions of their children. The auto policy does not create the liability, it provides coverage to the parent for that liability. If the teen is not insured, the parent will still be responsible for any accidents they cause. And, if you have a teen just learnng to drive, make sure that you contact us with their learners permit information to ensure that they are covered under your policy.
  • The only way to get coverage to drive any car is by purchasing “non-owners” insurance. Auto insurance was designed to provide coverage for the vehicle owner, not the car. The car isn’t going to be the one in court in the event a lawsuit results from a car accident; it will be the vehicle owner. Therefore, in most cases with some exceptions, the auto policy will provide coverage for the policyholder when they are driving other people’s vehicles.

There are several myths regarding auto insurance. It is better to bust these myths so that you are not caught in a bind when buying auto insurance. Breaking these myths will keep you better informed and forearmed against misconceptions before purchasing auto insurance. Always be sure to discuss your concerns with a Cliff Cottam Insurance Services Agent. Or, just give us a call at (800) 807-6871. We would be more than happy to answer any questions you may have.

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