There are a lot of myths surrounding auto insurance, and we want to shed a little light on a few major misconceptions. AAA Insurance compiled six of the most common myths that our agents hear to help you sort fact from fiction.
If you have any specific questions, talk to a AAA Insurance expert today. We’re here to help even if you’re not a policyholder.
6 Common Myths About Auto Insurance
MYTH: Rates don’t go up if you don’t report an accident
We’ve all heard the phrase, “let’s not get insurance involved.” Unfortunately, the other person could file a claim and their insurance company may then contact yours. Any tickets or accidents reported will also be discovered when it comes time to renew your policy. You’re always better off informing your insurance company so they can assist immediately to protect yourself.
MYTH: Insurance pays off your loan if your car is totaled
Collision and comprehensive coverage covers your car if it is totaled by another vehicle, storm, or other covered incident. The insurance company will pay out the fair market value of your car – think of it like the Kelly Blue Book value – not the amount of your loan. You’re responsible for the difference between the two. AAA Insurance offers special coverages, known as GAP insurance, that can help make up the difference for newer model year vehicles.
MYTH: Auto insurance covers both personal and business use of the car
Personal auto policies provide coverage for some business use, but if you are self-employed and your vehicle is primarily used for work, your policy is unlikely to provide coverage. This would fall under business vehicle insurance. Your personal auto policy will also not provide coverage if your vehicle is owned by the business itself. Talk to an agent to be sure you’re covered while driving for work.
MYTH: The state minimum for required insurance is the appropriate amount of coverage
The minimum bodily injury coverage for one person is $30,000 in NC and $25,000 in SC. With only the state minimum coverage, you are responsible for paying out-of-pocket for any additional expenses. Consider a situation in which you injure someone and their medical bills are over $100,000. You would be required to pay $70,000, which could drain your savings or even require you to sell your home. Experts generally recommend having $100,000 for one person injured in an accident and $300,000 for all people, but one size doesn’t fit all. AAA agents can help ensure you have the right coverage for your personal situation.
MYTH: If someone else drives your car, their insurance covers any incidents
Unlike a AAA Membership, which follows the member in any car, an auto insurance policy covers the vehicle itself. That means that your insurance company would be responsible for any damages caused regardless of who was driving. A good way to remember this is that if you lend out your car you are essentially lending out your insurance as well.
MYTH: It costs more to insure a red car
Contrary to what you may have heard, the color of your car has no bearing on your auto insurance. You’ll pay the same amount for basic brown as you would for fire engine red. The make and model, on the other hand, will have an effect on your premium. If you are looking for that new fire engine red car though, AAA Auto Buying can do all the heavy lifting for you!
Here’s one thing that’s not a myth. AAA Insurance provides a long list of discounts to help provide excellent service and coverage at a competitive price. Talk to an agent today to clear up any questions you have, and be sure to ask about the discounts for which you may qualify!