Car Insurance Mythbusters

Just like many areas in which people feel insecure about making decisions, many stories evolve about car insurance. A few have some basis in fact, others are wishful thinking and still others are just plain wrong. There is so much truthful information available to us, a little research will allow us to ascertain the truth. The place to start will be to determine whether you need auto insurance and then what kind. The misconceptions surrounding car insurance need to be addressed, so let's address the common myths.

The Person Who Caused the Accident Is Responsible

Not even close. You may be the kindest, most thoughtful person in the world, but to allow a friend or relative to borrow your car is one of the biggest mistakes you will ever make. If they are in an accident and there are damages to the car, they will not be required by law to pay for it, you will. Your name and driving record are on file with the insurance company and technically you are at fault.  You own and supposedly control access to the vehicle. Your friend or family member will understand your point of view when they realize that this is a huge responsibility for you, legally and financially.

Your Insurance Rate Rises and Falls With Interest Rates

Another myth, but one that sometimes appears to be true. Your car loan and mortgage may be affected by the rise and fall of interest rates, but your car insurance rate is not affected at all. The insurance company sets the rate and no economic factors but those of the company affects it. Interest rates and auto insurance rates may be close at times but this is a strategy of the insurance company. If they set the rates much higher than current interest rates, they will lose business by people shopping elsewhere. If they set rates too low, they will not collect the profits they need to stay in business.

All You Need Is Collision Insurance

There are many things that can damage automobiles. Other cars can damage yours in an accident, surely, but if you have only collision insurance, that's the only case in which you are protected. Complete coverage would include hail, fire, theft or being vandalized. For total coverage you have to purchase comprehensive and collision protection. It costs quite a bit more than only collision coverage, but the damages from other sources can be extremely expensive to pay for. In some policies, the costs of maintainance and repair are covered.

Car Color Can Make A Difference In Your Premium

Nope. There are many factors that make a difference in the amount of your insurance premium. One important factor is your credit score, it's an indication of your reliability and many insurers take your credit report into account when figuring your insurance rate. The specs on your car such as engine size, model, body type and safety features have a big impact, too. The most important factor of all is your driving history, which is the key reason to maintain safe driving habits at all times. A little bit of inattention or recklessness can affect your insurance rates for a very long time. Insurance companies know that reckless drivers will cost them big money and they're more than happy to pass on the costs to you.