If you are going to own a car, you should include the cost of car insurance in your budget. But the amount you pay for coverage and the amount you pay under your policy depend on several factors.
Now, there is a lot of misinformation out there when it comes to auto insurance. But if you buy into it, you may underestimate your costs and run into problems as a result. With that in mind, here are a few auto insurance myths that you really shouldn’t believe.
1. A car with extra safety features is cheaper to insure
Many newer cars today come with safety features designed to help drivers avoid accidents and stay focused. For example, some cars have lane departure warnings, where your car beeps when you enter a different lane. Others have brake warnings that sound when your vehicle senses you’re getting too close to another on the road. And many vehicles are equipped with backup cameras that make it easier to park and reverse without accidentally crashing into another car.
These features can be useful in their own right. But believe it or not, they won’t automatically result in lower car insurance premiums. The reason? Safety features like this can also be costly to fix. And that can be reflected in your car insurance premium.
2. Your credit score doesn’t play a role when you apply for auto insurance
It makes sense that your credit score would be a factor in your ability to get a competitive rate on a mortgage or personal loan since you are asking to borrow money. But when you apply for auto insurance, you’re not asking for a lump sum of cash — you’re insuring coverage for your vehicle. As such, you would think that your credit score would not affect your premium rates. But you would be wrong.
Discover: Save money with one of these top-ranked auto insurance companies
More: Check out our picks for the best auto insurance companies
Your credit score is an indication of how well you manage your accounts. As such, insurance companies will often use it to determine how well you’ll manage your vehicle, even though the two aren’t necessarily related.
3. The color of your car is important
You will often hear that red cars are more expensive to insure than cars with a more muted finish. That’s really not true. While a red car may stand out more on the road than a white or gray vehicle, ultimately the type of car you own and your driving history will have more of an impact on what your car insurance premiums look like.
4. You are not responsible for your own risk if another party is at fault for an accident
Let’s say your car is parked in a legitimate spot and another car hits you. Obviously, you are not at fault in that scenario. But that doesn’t mean you don’t have to pay your deductible while repairing your vehicle.
What will often happen in this scenario is that you pay your deductible, your insurance company will try to get compensation from the insurance company of the person who hit your car, and then your deductible will be refunded to you. But that can take a while, so it’s a good idea to keep money in savings just in case you need to pay cash upfront for a deductible.
Auto insurance can be a major expense, so it’s important to understand how it works and what goes into your premiums. And that means staying away from these potentially dangerous myths.
Our best car insurance policies for 2022
Ready to get car insurance? Whether you’re focused on price, claims handling, or customer service, we’ve researched insurers across the country to bring you our top auto insurance picks. Read our free expert review today to get started.
We are a firm believer in the Golden Rule and therefore editorial opinions are ours alone and have not been previously reviewed, approved or endorsed by the advertisers involved. The Ascent does not cover all offerings on the market. Editorial content on The Ascent is separate from The Motley Fool editorial content and is created by a different team of analysts. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.