Have you always dreamed of owning a sporty red convertible, but hesitated because of high insurance costs? You may be pleasantly surprised to find out that some choices (like car color) have far less impact on insurance rates than most people think, while other unrecognized factors could significantly drive up the cost of your car insurance.
Auto insurers are carefully governed by insurance laws, industry standards and actuarial statistics as they set their prices. Learning these norms and educating yourself about the most commonly held consumer myths could be a direct route to the car of your dreams, at a significant savings on insurance premiums.
Myth #1: Car color affects insurance rates.
Insurers base your rate on the safety record of your vehicle, the cost of repairs and your driving record. Since car color doesn't have any statistically significant effect on accidents, it isn't factored into their calculations.
Myth #2: Expensive cars are more costly to insure.
Your car insurance coverage for liability and medical expenses is based on claims experience rather than purchase price. If an expensive car has a better track record of avoiding accidents and minimizing damage, it could actually be more affordable to insure than a lower-priced model. High performance sports cars commonly have surcharges that affect insurance premiums.
Myth #3: Older cars are cheaper because nobody steals them.
In fact, the reverse is often true. Some thieves prefer stealing popular older cars (like the Honda Accord and the Toyota Camry) because of the higher demand for their spare parts. This is the reason owners of older cars may wish to continue buying comprehensive protection against auto theft.
Myth #4: All insurers price individual models the same way.
Each insurer bases pricing on their own claims experience, and some companies have a better track record on a particular model than others. Getting quotes from a variety of companies can lead to significant savings.
Myth #5: My rates are based solely on my driving record.
Long ago, insurers discovered a reliably positive relationship between a driver's claim experience and their credit rating. The result is a lower rate to policyholders with better credit scores. Check your credit report before you shop, and be sure to correct any incorrect information.
Myth #6: If I get a traffic ticket, my rates will go up.
While this is often true, it isn't universally the case. Drivers with a long-term track record of safe, citation-free driving may avoid a rate increase from a single ticket. A preemptive call to your HUB broker is a smart way to find out the details. Traffic citations are matters of public record, so your insurance company is likely to learn of the ticket eventually.
Myth #7: A friend's insurance covers them when they borrow my car.
The particulars of protection for lending cars can be quite complex. In many cases, your auto policy covers anyone who borrows your keys, while in other situations a driver's coverage can cover the cost of a collision. The best policy is to avoid lending your car whenever possible, especially to a driver who may not have adequate insurance coverage.
Myth #8: Personal auto insurance covers business driving.
If you are self-employed, it may be risky to assume that all your business mileage falls under your personal auto coverage. Make sure you know the limits of your auto insurance, and do the same for your employees who drive as part of their jobs with your company.
The best way to separate the myths from the facts about car insurance is a friendly conversation with your HUB insurance broker. HUB can also easily provide a quote on insurance costs for the vehicle you've always dreamed of owning. The savings could surprise you, and might even put you on the road to getting that sporty red car that will make the neighbors green with envy.