Common Auto Insurance Myths Debunked

Auto insurance is complicated. There are different coverage types, and each state has its own requirements. There was a time when we could give customers a rough, “ballpark” quote for auto insurance with a few quick questions about age, type of car, etc. However, ever since NJ’s 2014 Automobile Insurance Competition and Choice Act, this has become impossible. Insurance companies now use advanced algorithms to determine your rate, and everything from credit to your occupation can be a factor. You and your neighbor might have the same insurance carrier but drastically different rates. While this is all “normal” in the insurance industry, it can be confusing to consumers.

To help you better understand what car insurance is and is not, we’ve compiled a list of common auto insurance myths. We addressed each one and the truths behind them.

Purchasing the state’s minimum requirements is enough.

In New Jersey, you can choose between Basic and Standard Policies, in addition several coverage limit options. But, do not assume that because you are a safe driver, you can get away with the lowest coverage. Medical bills can be exorbitant, even if the accident wasn’t major. It doesn’t take long for injuries to exceed your liability coverage limits.

In the end, it’s better to be safe than sorry. Paying for more coverage is far cheaper than digging into your assets to pay for medical bills.

Full coverage offers full protection.

When you hear “full coverage,” it’s easy to assume that you are fully covered if you are in an accident. However, just because you purchase the main types of car insurance doesn’t mean you are fully covered. A lot depends on your coverage limits and your deductibles. In other words, if you purchase the minimum coverage for each type of coverage, you might still have a lot of out-of-pocket costs.

Anyone driving your car is covered.

It’s a common misconception that your car is covered no matter who is behind the wheel. Some types of auto insurance policies cover the car, while others cover the driver. Before you assume anything and lend your vehicle to a friend, know the coverage you have. Some of the major mass market insurance companies actually require every single person driving your car to be listed on the policy.

Assuming you have a standard auto policy with a standard auto insurance company, something you should never assume (ask us!), and you have collision and comprehensive coverage in NJ, your car will be covered in an accident no matter who is driving. You will still have to file a claim and pay your deductible, but the damages will be covered.

The age and color of your car affects your rates.

Many people believe that newer cars have higher premiums because they are more expensive. While this can be true, it’s not always the case. Many of today’s newer cars have safety features that prevent collisions, so they could actually cost less to insure than older cars. In reality, there is no age limit that causes your insurance to be higher or lower.

As for color, it’s a common myth that red cars cost more to insure. While auto insurance companies do use the year, make and model to calculate your rate, they do not use color. So, if your heart is set on red, go for it. There’s no harm done.

To ensure that you are always getting the best coverage for the price, obtain quotes from an independent insurance agent like us with access to multiple insurance companies. It’s the best way to know that you are getting a fair price for your auto insurance.