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Five Misconceptions That You Could be Entertaining About Car Insurance

– Posted in: Auto Insurance, Auto News, Everything Auto, Insurance 101

 

 

There is no scarcity in dealing with misconceptions when you work as an Insurance Advisor for several years.

 Often times, I hated that part of my job when I had to be the one to burst the bubble for the clients when they tend to hold on to their insurance misgivings or proclaim their sincere faith in a certain insurance myth.

 In time, I have learnt to brace up and talk sense to my clients while working with them to provide the best insurance coverage possible for the most reasonable rates.

 And I think it is only fair to let you in on some of the most common misconceptions that I have heard repeatedly over the years. It would be my pleasure to show you the correlation between an Insurance myth and the truth surrounding it.

 Let’s talk about Car Insurance. 

Insurance policy

 

Listen into this conversation between my client and I

 

 Client: okay, I have bought a car finally!

 Me: Great! Congrats!

 Client: Thanks! I have all the information you require to get the insurance started on it right  away.

  Me: Very good! (And I settle into getting the details on the vehicle which my client is providing very efficiently.)

 We are almost at the end. Suddenly…

 Client: Oh, and one more thing. The color of the car is blue.” So, I hope you can give me a better rate?

 Client is looking at me expectantly as if he just delivered the punch line and it is my turn to declare a favorable verdict for him.

The Verdict?

 I manage to tell him somehow that colors don’t impact the premium at all and it is the driving record, claims history of the type of the vehicle among other things that determine the insurance rate.

 Myth: Red Car is Always Costly to Insure.

Reality: Red car is no more costly than any other car.

 

Do you have any tickets in the past three years? (Me)

 No (Mr. Smith)

 After completing the quote, I pull the driving history report and roll my eyes seeing 2 tickets in 3 years time for our Mr. Smith!

 Mr. Smith! How come you didn’t disclose these tickets to me? (Me)

Because I did not get any demerit points for them and it is not on my record. (Mr. Smith)

 Myth: Absence of Demerit points for a ticket qualifies the client to maintain his clean driving record as it is not counted against him.

 Reality: Absence of Demerit points do not make a ticket go away. If there is a ticket, with or without the demerit points, it is counted on your record.

 

 Yet another misgiving is about a No Claim At Fault Accident. 

 

car accident

 

The notion is that if a client faces an At Fault accident (client causes accident) and do not make a claim to get compensated for the damages to the vehicle, it would not be rated on their policy. Regardless of claiming or not claiming, the accident was your fault and it will be rated.

 Myth:  If you do not claim for your loss, your accident will not be rated against you

 Reality: Yes, it will!

 

 

Another misconception that I handle very often is related to the age factor.

 A client informs me one day that he turned twenty five!

 I say, “Happy Birthday”! I was totally unsure of the purpose of his visit, when this happened the very first time. 

 “Isn’t my Insurance supposed to be cheaper when I turn 25?” He asked.

 Oh no! Not again (I groan)

 “Mr. Doe, Your premium will start getting better when you are a matured driver and steer clear of accidents. When the renewal comes, if your driving record remains clean and the Insurance Company as a whole have a good claims standing, then you will get a cheaper premium. But being 25 cannot earn you a cheaper premium right away.

 Myth: At age 25, the policy holder will immediately witness a tremendous decrease in the premium

 Reality: That is not true. In order to earn a good premium, you have to maintain your driving record and good claims history in the years to come. There is no short cut. Being 25 does not help you to fast forward the process.

 

 Sometimes, a client gets confused on the differences in the premium on his policy and that of his neighbor when they both are insuring the same type of vehicle.

Well, no two policy premiums are meant to be the same, ever! Doesn’t matter if you live in the same neighbor hood as the other policy holder. There are too many other factors to consider- for starters, the Vehicle Identification Number (VIN) which is unique and which greatly determines the loss history associated with the car YOU are driving, your driving record which should be different from your neighbor, the company you are insured with etc are only some of the factors considered.

 Myth: If my Neighbor is getting cheaper rate for his car insurance, I should be getting the same rates as well

 Reality: Not true! Your Premium is unique because your risk profile is unique to the Insurance Company you are insured with.

 Are you guilty as well in entertaining any of these Insurance myths? Or do you have a new one to share? I am listening Cool

 

 

 

42 Comments… add one
Ashley July 19, 2013, 10:36 am

Insurance is so confusing! Thanks for debunking these common myths!

cindy b July 19, 2013, 11:21 am

Thanks so much for the info! I hate dealing with insurance! ahh!

Suzi Satterfield @ Cloth Diaper Addicts July 19, 2013, 12:57 pm

Hm. I always bought into that 25 myth. That was why I’d decided that I was 25 and holding for so many years. (It seems pointless to age from then until 55. That’s when senior citizen discounts often start to apply.)

Motherhood on the Rocks July 19, 2013, 1:05 pm

I believed a lot of these myths. Thanks for clearing them up!

Ave July 19, 2013, 1:12 pm

Some of the myths are really funny :D, but thanks for the information! Really great post!

Anita Breeze July 19, 2013, 2:57 pm

And this is why we need insurance agents!

Regan July 19, 2013, 4:00 pm

Fun and informative post. I believed the 25 myth :)

Kate July 19, 2013, 4:20 pm

I definitely though tickets went away! Thanks for sharing these myth busters!

Sharon July 21, 2013, 12:57 pm

I just reviewed my car insurance a couple of months ago. I try and stay on top of this and compare insurance often and let my insurance company know that I am comparing. I have a great rate now. However, each year, I’m always reviewing my car and house insurance to get the best value and rate.

Kristy O July 21, 2013, 10:28 pm

Great things to know, thanks for sharing!

Greg Fowler August 18, 2013, 12:03 pm

Another great thing to do is get quotes before you buy the vehicle. There are so many misconceptions, for example, an older car is cheaper to insure, which is not true. And the 25 age myth is not true as stated, most aren’t going to see a reduction in rates until 30 with a clean record.

Terri September 4, 2013, 7:21 am

Great post! Insurance gives me a headache! Thank you for sharing!

Toni Cosgrove September 4, 2013, 10:23 am

didnt realize how many of these I had believed…wow

Kamla L. September 4, 2013, 2:09 pm

I was also a believer of the 25 myth. I will have to review my policy as to their driver classification rubrics but I’m pretty sure there are age classifications other than the senior citizen one.

Kelly Maxwell September 4, 2013, 2:21 pm

We all have misconceptions about car insurance, unfortunately. Thanks for clearing up a few of these!

Marcia Lee September 4, 2013, 8:28 pm

It may be a myth, but as a parent it is so hard to pay car insurance for our driving kids, especially for boys. We would like to believe that there is a magic number that our sons will hit & our rates will once again go back to “normal.”

Sylvia Zajis September 4, 2013, 8:33 pm

I worked in insurance for many years, it is amazing the folklore people believe about the industry.

Momless Mom September 4, 2013, 8:34 pm

Haha.. Sylvia! Right on! :)

Sandie W September 5, 2013, 4:57 am

I really like the blue car discount! (I have 2 blue cars) hahaha Though I’m laughing, I’m sure that sometimes people can blow your mind.

I had an insurance agent years ago that told me if I’d get divorced that my premiums would drop! Where that may have been true, I really resent the fact that so many people treat marriage so disposable! (my marriage didn’t last, but I didn’t end it to get better premiums)!!

stacey robinson September 5, 2013, 5:02 am

il be getting a car in the next year after i have passed my test

Shana Norris September 5, 2013, 9:03 am

Great info, Vinma. I think it’s always best to check with your insurance agent before making any assumptions.

I added my husband to my auto insurance after our marriage last summer. I assumed that my premium would go up because he had an at-fault fender-bender (he was ticketed for it) but alas, it didn’t. Now, that was a pleasant surprise and one instance where the reality was BETTER than my assumption. Too bad that doesn’t happen more often :)

Momless Mom September 5, 2013, 9:05 am

Yes, sometimes it is possible to get pleasant surprises in Insurance, believe it or not Shana lol.. I am glad your rates went down.. good for you :) Thanks for stopping by

misssrobin September 5, 2013, 9:35 am

Wow. How frustrating your job must be some days. I can’t say I’ve even heard of any of these except the age one. My husband and I have five kids, ages fifteen to twenty two. They all live at home. They are all licensed drivers except the youngest, who has her permit. We own and insure four cars. Luckily, we have wonderful driving records and so do our kids. Plus, our kids get good grades, which does lower our rates a bit. But still, you can imagine how much we pay for car insurance. Thanks for the clarification on the myths. It’s always nice to know what will work and what won’t — especially when it can be so expensive.

Sheila Skillingstead September 5, 2013, 9:43 am

You make me laugh. I teach Financial Algebra and one of the topics is Car Insurance. After the first year, I noticed the students didn’t really believe me or the book so I brought in an insurance agent. Thanks for the light blog. Enjoy your job and your SITS Day. Here’s a non myth for you. If you have an accident around the Arc de Triomphe in Paris you pay 50% since they don’t try to figure out who is at fault because of the large number of roads that merge on that roundabout.

another jennifer September 5, 2013, 9:43 am

I’ve heard all of these myths. It’s funny how they get started and people believe them. Luckily we have people like you to set us straight!

Happy SITS Day!

Rabia @TheLiebers September 5, 2013, 10:37 am

I will admit that I was a little worried when my new van turned out to be Burgundy. I thought that might be a little too close to red. Of course, it’s a van, so there’s probably not many people out hot-rodding around in those!!

Savvy Working Gal September 5, 2013, 1:32 pm

This is so interesting and such great information. I also know of someone who didn’t get a job because she didn’t disclose she had a DWI. Not because she received one, but because she didn’t disclose it when asked. She was underage at the time and didn’t think it would show up.

Nancy @ The Avid Reader September 5, 2013, 4:21 pm

Thanks for the heads up.

Mo at Mocadeaux September 5, 2013, 5:37 pm

Thanks for pulling back the curtain on how car insurance really works! Happy SITS Day!

Kelly September 5, 2013, 8:41 pm

I think everyone believes in the 25 Myth. I have never heard anyone say that color affected insurance but it is funny to think about someone mentioning it! Happy SITS Day!

Keith W September 8, 2013, 1:41 pm

Insurance comparison sites have seriously reduced the time it takes to find a reaonable quote.

mindy cole September 8, 2013, 3:50 pm

Thank you sharing the great tips

Rebecca Parsons September 8, 2013, 7:34 pm

I love the one about the color of the car. I honestly never heard that. I have heard cops tend to pull certain color of cars over more than others.

margaret peg m September 9, 2013, 10:33 pm

auto insurance is one thing, but ‘home’ insurance is a whole other ball of wax…thanks for the info, though.

Rebecca Roth September 11, 2013, 1:06 pm

Thanks for the info! And thanks for your contribution in the Kindle giveaway!!

A Rambling Reader September 15, 2013, 11:50 am

Thank you for the informative post! Much appreciated! Also, for your involvement in the Kindle Fire giveaway!

DASHA September 15, 2013, 3:12 pm

Thanks so much for the info!

krystal rivera September 19, 2013, 8:51 pm

wow thats some great tips! and we just finished purchasing our very first van and are getting ready to insure and register it now! thanks ima have hubby look this over

md kennedy September 19, 2013, 11:02 pm

All types of insurance can be really confusing – but it looks like you are able to handle our “duh” questions very well!

Lisa F. September 22, 2013, 1:16 pm

I didn’t know about the red car myth. That’s a weird one. Thanks fort sharing these myths and facts.

Lisa Ehrman September 22, 2013, 2:54 pm

Thanks for this post. I did wonder when my sons’ insurance rates will go down, but I guess there is no magic number.

Tammy Woodall September 22, 2013, 7:14 pm

Thanks for the information. It is true that many do not disclose everything, and, I am not sure why the people don’t realize the Insurance companies will find out.

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