When Prince wrote “Little Red Corvette,” he probably wasn’t thinking about auto insurance. But if the song inspires you to buy a red car — and drive it as fast as the lyrics suggest — you might want to know if certain car colors cost more to insure or if a speeding ticket will increase your insurance rate.

Unfortunately, there are a lot of auto insurance myths and misinformation out there. Before you purchase a policy, you should understand which factors affect the cost of your premium and how your coverage works — that way, you don’t have to wait until you get into a car accident to find out.

We’ll help you separate fact from fiction so that you can leave misconceptions behind and get closer to the right policy for your wallet and situation.

Myth or Reality: The Color of Your Car Affects Your Auto Insurance Rate

Do red cars cost more to insure? It’s common to hear that bright red cars draw too much attention and can become a more likely target for traffic stops — especially when compared with white cars that may help drivers fly under the radar. So, does car color really make a difference when it comes to insurance offers?

The verdict: myth

Auto insurance companies aren’t very concerned about the color of your car. What matters is the make, model, age, and location of the vehicle, among other factors. Insurers also want to know how often you’re driving the car, as well as information about your driving history, before they give you a final price.

Myth or Reality: You Must Get the Minimum Amount of Liability Insurance

Maybe you’re a great driver who has never gotten into an accident before, so paying for insurance seems unnecessary. Or, perhaps you don’t drive that often, and when you do, it’s only short distances to run errands. Is it illegal to drive without car insurance?

The verdict: reality

In the U.S., you cannot legally drive a car without proof that you can financially cover any damage or liability if you’re in an accident. Most states want to see this evidence in the form of auto insurance, which means that you must buy at least the minimum amount of liability insurance required by law.

“The legal requirements and the amounts you need for your auto insurance can vary from state to state,” says David Adler, president of Adler Insurance Group, an Allstate insurance agency in the Denver metro area. “For instance, in Florida you only need $10,000 coverage for property damage liability per accident and $10,000 for personal injury protection. Meanwhile, in Colorado, drivers are legally required to carry coverage for $25,000 for bodily injury liability per person, $50,000 bodily injury liability per accident, and $15,000 property damage liability per accident.”

Keep in mind that going with the bare minimum of auto insurance may put you at risk for paying high costs out of pocket if the damage from a car accident exceeds your policy’s limits. Vehicle damage and medical bills from a serious accident could result in a sudden, major financial burden, and even a fender bender can be surprisingly expensive.

Myth or Reality: Insurance Will Always Cover a Stolen or Vandalized Car

The whole point of having auto insurance is to be covered when something bad happens to your car. So, surely even the most basic car insurance policies will have your back during worst-case scenarios, like if someone steals your vehicle or vandalizes it, or if a tree limb falls on your car — right?

The verdict: myth

Unfortunately, you might not be covered. Many states only require liability insurance that will cover bodily injury or property damage if you’re at fault in an accident. To protect yourself financially if your car is stolen, vandalized, or damaged in any way outside of a collision, you’ll also need to purchase comprehensive insurance.

Myth or Reality: Your Credit Impacts How Much You Pay For Auto Insurance

If you tend to miss credit card and loan payments or pay your bills late, then you’ll likely wind up with a negative credit report. Having bad credit can make it more difficult — and expensive — for you to get an auto loan. But does having bad credit also mean you’ll pay more for car insurance? (What does your financial history have to do with your driving ability?)

The verdict: reality

According to the Insurance Information Institute, insurance companies consider credit to be a predictor of whether someone is more likely to file an insurance claim. As a result, having good credit can help you save on car insurance.

Myth or Reality: Your Personal Auto Policy Includes Business Use of Your Car

If you get into an accident, you might think that your auto insurance policy will cover you regardless of what you were using the car for at the time of the collision. After all, the policy is in your name — is it the insurance company’s business to know what you were up to?

The verdict: myth

Check the details of your policy, and confirm with your insurer — you might need to purchase separate business vehicle insurance if you’re self-employed and using your car for work.

“Your own personal auto policy can provide coverage for some business use of your vehicle; however the key word here is some,” Adler says. “If the car is primarily used for business, your personal auto policy is unlikely to provide coverage. And it is unlikely to provide coverage to protect your business when your business really needs it.”

Myth or Reality: If a Friend Drives Your Car and Gets Into an Accident, Their Insurance Will Cover It

Let’s say you let someone borrow your car to run an errand — and they wind up getting into an accident. If your friend is at fault, it might make sense to you that their insurance company should pay for the damages since they were the one who caused the collision, not you. Doesn’t auto insurance coverage follow the driver?

The verdict: myth

Even though your friend was the one who got into the accident, the car belongs to you, so your insurance must cover the damages. In most states, the primary insurance is the policy that covers the owner’s vehicle, according to the Insurance Information Institute.

“Your friend’s auto insurance policy — if they have one — will kick in if the costs of the damages and injuries exceed your coverage level,” Adler says.

Myth or Reality: Expensive Cars Cost More To Insure

It seems logical that insuring a fancier car would cost more than covering an older, more basic model. After all, the overall value of a vehicle with all the bells and whistles is that much greater. At the same time, since higher-end cars typically come with the latest safety features that can help reduce the likelihood of an accident, insurers could view these vehicles as less risky to cover.

The verdict: reality

The cost of your car is one major factor that affects the price of your insurance premium. However, there’s another factor that may matter even more to your auto insurer.

“Higher-end luxury vehicles and sports cars are typically more expensive to insure, but this isn’t just because of the price tag,” Adler says. “Those higher insurance rates are mainly due to the repair costs, because those high-end materials will typically cost even more than regular replacement parts.”

Myth or Reality: Small Cars Cost Less To Insure

If flashy, higher-end cars cost more to insure, then you might assume that insurance is less expensive for smaller vehicles. After all, buying a small sedan is often more affordable than buying a midsize SUV. Plus, smaller cars can be more agile in sticky situations on the road and squeeze into tighter spaces — like a compact parking spot or narrow alley — without scraping another object and damaging the paint job.

The verdict: myth

First off, smaller cars aren’t always cheaper to buy — which you’ll be reminded of when you look up the retail price of a sports car. According to a 2020 report by AAA, the cheapest type of car to insure, on average, is actually a small SUV, while the most expensive type of car to insure is a small sedan.

Myth or Reality: Your Insurance Rate Automatically Increases When You Get a Ticket

As if paying the cost of a pricey ticket isn’t bad enough, it’s often thought that a traffic violation will also cause your insurance company to hike up your premium. If you’ve been caught accidentally speeding or engaging in other unsafe driving practices, you might be worried that your insurer will view you as higher risk and charge more for coverage.

The verdict: myth

If it isn’t a major traffic violation and you have a good overall driving record, your insurance company might cut you some slack on a one-off ticket. However, don’t get carried away. If you begin to rack up multiple violations, your insurer may increase your rate after all.

Myth or Reality: If Personal Belongings Are Stolen From Your Car, Auto Insurance Will Cover It

When you have an expensive item in your car — like a laptop, smartphone, or tablet — that’s visible from the outside, a thief may be tempted to break a window and steal it. Because you have auto insurance and the item was taken from your car, you might think that the theft will be covered.

The verdict: myth

Auto insurance — specifically comprehensive insurance — only helps cover the cost to replace your stolen vehicle and doesn’t include any of your belongings that might have been inside. However, if you have homeowners or renters insurance, those policies will likely take care of the stolen items. That’s because homeowners and renters insurance typically helps cover your belongings even when they aren’t at home.

Myth or Reality: Having No-Fault Auto Insurance Means You’ll Never Be Determined at Fault

So, you’re shopping around for an auto insurance policy, and you see something called “no-fault insurance,” which sounds fantastic. You know that when someone gets into an accident, the at-fault driver’s insurance must cover any damages. This no-fault insurance makes it seem like you’ll automatically be off the hook and the other driver’s insurance will have to take care of everything.

The verdict: myth

No-fault insurance, aka personal injury protection insurance, helps you take care of your medical bills and loss of income due to a covered accident — no matter who was at fault. However, no-fault insurance doesn’t cover car damages, so if you caused the collision, you’ll have to look at the rest of your policy to see if your insurance will cover the costs. Keep in mind that no-fault insurance is mandatory in some states, and every driver must file a claim with their own insurance company in the event of an accident.

Myth or Reality: Older People Pay More For Car Insurance

The sad reality is that vision and cognitive ability generally decline with age, which can create unsafe conditions on the road. We know that auto insurance companies usually charge more for drivers under age 25, who are viewed as less experienced — but what about seniors?

The verdict: a little of both

Older drivers get into fewer car accidents, according to the Insurance Information Institute. However, that doesn’t mean advanced age isn’t considered a risk factor by insurers. According to Adler, seniors should expect to pay higher auto insurance rates because they’re viewed as higher-risk drivers.

“As we grow older, we all tend to experience changes in our hearing and vision, and may even develop slower reflexes, health conditions, and rely on medications,” he says. “Those factors can make seniors more prone to accidents, so their insurance rates will tend to be higher.”

On the flip side, some companies offer auto insurance discounts to older drivers if they successfully complete a defensive driving course. For example, with Nationwide, drivers age 55 and older in certain states can earn a discount of around 5% if they finish a state-approved accident prevention course and have avoided at-fault accidents in the last 35 months.

Myth or Reality: Men Pay More Than Women For Car Insurance

Are men more reckless on the road compared to women? There has been a fair amount of scientific research on this topic. Some studies have found that younger males are more frequently involved in car accidents and traffic violations, and others have concluded that they’re more likely to engage in aggressive driving behaviors and be less concerned about the risk of an accident.

The verdict: reality

According to the Insurance Information Institute, women statistically get into fewer accidents than men. Females also have fewer DUI incidents, and their car accidents are generally less serious. As a result, auto insurance companies tend to charge men more for coverage.

One important note: Keep in mind that your race or religion can never be used to make you pay more for insurance.

Myth or Reality: Your Grades Can Bring Down the Cost of Auto Insurance

You may have heard that maintaining a high GPA at school can help you score a better deal on car insurance. But what do grades have to do with driving ability? After all, you could be a good student and a terrible driver at the same time.

The verdict: reality

Many companies offer discount car insurance if you’re doing well in school, but the exact criteria and discount size will vary. For example, Geico requires you to maintain a B average or better as a full-time student to get up to 15% off, while State Farm offers up to 25% off (and the discount remains valid until you turn 25 years old).

Myth or Reality: Insurance Will Pay For a New Car If Yours Is Totaled

When you’re in a serious car accident, there’s a chance that your vehicle could be damaged beyond repair. You can’t drive without a car, so you might assume that your auto insurance policy would help you replace the totaled vehicle.

The verdict: reality (with a catch)

It’s true that auto insurance — specifically collision coverage — can help replace your car if it’s totaled in an accident. However, the total payout amount will usually be the cash value of your car, which is affected by depreciation. Your car’s value decreases over time due to normal wear and tear, so the money you’ll get to replace the vehicle won’t match the original price that you paid.

Myth or Reality: Your Insurer Can Cancel Your Policy at Any Time

When you purchase auto insurance, you’re paying for the peace of mind that your insurance company will cover any bills resulting from a car accident. But could you get a fender bender and then find out that your insurance company has suddenly canceled your policy for whatever reason?

The verdict: myth

As long as you’re following your end of the deal, an auto insurance company can’t just pull the rug out from under you.

“State laws help protect consumers by dictating when coverage can be canceled,” Adler says. “Your policy could be canceled if you haven’t paid for your policy, your license is revoked or suspended, your vehicle lacks registration, you make a fraudulent claim, or there is any fraudulent behavior in your account.”

The Bottom Line on Auto Insurance Myths

Don’t fall for common car insurance myths and misconceptions about auto insurance, even if they sound logical. While your family and friends can refer you to auto insurance companies that they’ve had a pleasant experience with, you shouldn’t necessarily trust their word when it comes to your policy details. If you take the time to learn the right car insurance facts, you can save money on car insurance and make sure you’re adequately covered at the same time.

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