Auto insurance works on very simple policies and is overflowing with myths and wrong information due to lack of comprehension of the system. Lets touch base on a few of the most popular auto insurance myths.
New cars are stolen more often than older cars
Another variant of this myth is that the more expensive a car is the more likely it is to be stolen, there is absolutely no base to these myths and in fact there are statistics to prove otherwise. Cars are stole based on their demand in the market and nothing else. A car which is in high demand will always require spare parts such as body panels engine components and even entire engines. Most cars that are stolen are broken down and their components are sold as used spares. The most stolen car is the 1995 Honda Civic and the 1991 Honda Accord in hot pursuit.
Red cars attract a higher auto insurance premium
This is no truer than the first myth, however unlike the first myth there is a base to this myth. Most often red cars happen to be sport cars. Sports cars attract a higher premium but for a complete different set of reasons such as higher capabilities and the fact that they seem to be preferred by enthusiasts who prefer to push the vehicle to its limits. The color of the car is not something that is even considered in your premium calculation by insurers.
Auto insurance covers theft and vandalism
The truth is your auto insurance policy may cover you from theft, vandalism, hail and fire damage and even acts of nature provided you have the cover for it. If you have comprehensive cover you are likely to be compensated for the damage, however if all you have is liability and collision cover you will not be covered from theft and vandalism at all.
The insurance company will pay off your loan on a totaled car
This is absolutely baseless and makes no sense if you think of it from the insurer’s point of view. The insurance company will pay you an amount based on the current market value of your car while taking depreciation into accord minus the deductible. If you purchased your vehicle for $100000 and its market value today is $75000 and your deductible is $10000, your payout will be only $65000 and no more. You receive the payout and then you can either use that amount to pay back your loan or lease or buy a new vehicle and continue to make the monthly payments.
Although there is a way out, and you can get gap insurance to protect you from this issue. Gap insurance will cover you for the difference between the current market value of your vehicle and the amount you still owe to the leasing or loaning agency or bank.
If you drive a sports car or a large SUV you are more likely to get a ticket:
This myth is baseless however can be supported by statistics. The difference is the reason why the ticket is given out; the high performance 500bhp Mercedes and the Hummer lead the list of vehicles which get the most number of tickets, due to traffic violations. You can safely drive a sports car or a large SUV and you will not get a ticket until you violate a traffic law, it just so happens that drivers of such vehicles tend to be enthusiasts who push their vehicles to the extremes thus breaking traffic rules.