Auto insurance covers items stolen from your car. If your car is totaled in a crash, the insurance covers what it is worth after the crash. Your auto insurance pays for mechanical repairs.
Many believe these are covered by auto insurance. In fact, they are not. They are common auto insurance myths. According to PropertyCasualty360.com, Princeton Survey Research Associates International conducted a survey for insuranceQuotes.com in 2015 to find out how misinformed consumers are about their auto insurance. Their findings were surprising.
InsuranceQuotes.com senior analyst Laura Adams said that the survey results “indicate that millions of Americans need a fresher course on what insurance does and does not cover.” Check with your insurance agent to clarify what your policy covers and whether you need to add or drop some coverage.
The five common auto insurance myths are:
- Red cars cost the most to insure – The survey showed that 44 percent of respondents believed that driving a red car would cost more to insure. The fact is the color of the vehicle does not affect insurance premiums. However, the type of vehicle does, such as a luxury import sports car would cost more to insurance than a standard American vehicle.
- 2. Auto insurance doesn’t cover you if you cause a crash – Thirty-seven percent (52 percent of those millennials) believe that auto insurance wouldn’t cover them if they are at fault in a collision. This may be due to the fact some consumers only have liability coverage which pays for damage to someone else’s property if they are the cause of the crash. Liability coverage does not pay to replace or repair the insurer’s own vehicle.
The fact is liability insurance is required coverage in most states while collision is optional and pays for damage to an insured’s own vehicle, even if they are at fault in a crash. It’s a good idea to carry uninsured/underinsured coverage that pays for damage and injuries caused by a driver who has no insurance or is underinsured.
- Insurance only covers what the vehicle is worth after a crash – Twenty-eight percent of those surveyed believed that insurance only pays for the post-crash value of their vehicle. Another 12 percent didn’t know what the insurance covered. The fact is auto insurance pays the market value of a new vehicle before the crash. Some policies offer new-car replacement that pays the cost of what the vehicle would be before depreciation. Liberty Mutual, for example, offers coverage for vehicles less than a year-old and have been driven less than 15,000 miles. It’s an endorsement and obviously is an added fee to the policy.
Consumers should consider gap insurance if they owe more than the vehicle is worth. This coverage pays off the remaining balance on the loan if the vehicle is totaled.
- Auto insurance covers mechanical repairs – Fourteen percent of respondents believed that their auto insurance would pay for mechanical repairs. Also believing this to be true were 23 percent of Millennials and those who make less than $30,000 a year. The fact is auto insurance does not pay for routine mechanical repairs. The insurance only covers damage caused by a collision.
- Auto insurance covers items stolen from your car – Thirty-four percent of respondents believe auto insurance would pay for belongings stolen from their car. Forty-seven percent of those 64 years old and older also believed this to be true. The fact is auto insurance does not cover stolen items from vehicles. Homeowners and renters insurance, however, would cover items stolen from vehicles as long as the items are worth more than the deductible. As an example, if a laptop was stolen from the car and it was worth $2,000 and the policy has a $500 deductible, the insured would receive a check for $1,500.
Your insurance agent is the best source to tell you what is “myth” or “fact” when it comes to your auto insurance. Have your agent go over your policy with you to see if you have the right insurance coverage.
If you are in need of an insurance agent or are looking to find out what your insurance options are for your home, auto, health or business please contact me.
Independent Insurance Broker
Walter J. May Insurance Agency Inc., Hingham, MA
Direct: 781-740-5421 Cell: 617-827-6848