Many insurance policies can be quite confusing sometimes. There are tons of options, terms and conditions and a policy holder can easily get lost in all of them. Moreover, every state has its own regulations as to every policy. For instance, car, business and private unemployment insurance in California have much more options than the same insurance policies in Utah. Automobile insurance is not an exception. There are different myths that most policyholders share. Here are some of them.

1. My old vehicle will not be stolen.

That is surely wrong. Statistics say that automobile thieves would sooner steal older vehicles because it is easier.

2. The color of my automobile makes difference.

It is commonly believed that red autos drive premium prices up. It is a delusion, though. Insurance carriers are more interested in the model and the make, body style, engine size, year, and sometimes location (it sometimes matters if a car is parked in a street parking, driveway or it is in a garage). What matters is your behavior. If you make violations such as reckless driving or speeding, your premiums will definitely be affected no matter what color your automobile is. So car color is absolutely insignificant for insurers. You should still keep your vehicle safe.

3. Credit scores do not influence insurance premiums.

Premium rates are commonly determined by numerous factors. And in most of the times your credit score also has some influence as it shows how you manage your pecuniary affairs. So many insurance companies pay attention to this factor as well.

4. I'm protected if my vehicle is damaged by wind, hail, flood or fire, stolen, or vandalized.

Collision and comprehensive coverage are not included in all the policies; it is optional. So if the vandals paint graffiti on your cat or a big animal damages it, you won’t necessarily be covered. So if you want protection from those events, you need to include those options to your plan.

5. My friend borrowed my vehicle, so he becomes responsible in case of an accident.

Auto insurers insure your vehicle and they follow it, not you. So even if your friend causes damage by operating your car, still it is you who will be responsible.

6. My insurance carrier can cancel my plan at any time.

If there is no adequate reason for cancelling your policy, you have nothing to worry about. If there have been no frauds or non-payments, your insurer cannot cancel your plan.

7. I'm covered for a rented vehicle.

If your vehicle is damaged or stolen, rental car compensation is not always included in your plan. But you can easily add it to your policy as it is quite affordable (typically $1-2 per month).

8. Personal belongings inside my vehicle are covered.

Not true, unfortunately. If your costly guitar was destroyed during an accident, car insurance cannot help in most cases. You can insure your guitar, laptop, expensive golf clubs and other items through homeowners or renters insurance, though.

9. Having no-fault coverage means it's not my fault.

Such insurance types vary in different states. But in general it implies that you and the other driver will get reimbursement for immediate expenses (lost wages, medical services) while insurance carriers decide whose fault it was.

To Sum Up

Thorough reading of the fine print is a must if you want to have a full picture of what your policy covers and what is out of the coverage.

About the Author

The article is written by Jana Rookard, a team writer of LocalMart, who enjoys writing about new things, related to career challenges, real estate news and car industry.