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9 Common Car Insurance Myths

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  • 6 min read
Let's debunk some car insurance myths.

When you think about car insurance, what first comes to mind? Is it actuaries and at-fault assessments? Is it deductibles and depreciation? Or is it the funny commercials featuring obsessive sales ladies, talking geckos, buddy-cop emus, and cool-as-a-cucumber insurance agents in red polos? To most of us, the subject of car insurance is boring and sometimes utterly confusing. It’s no wonder insurance companies have opted to make their commercials silly and fun. Insurance is an expensive product, and it is no fun to buy. It’s also no surprise that there are a lot of confusing car insurance myths to contend with.

Myth #1: I don’t need to worry because I have full coverage.

Reality: “Full” coverage doesn’t really exist.

Full coverage is an industry term that incorporates comprehensive and collision coverage. You are not necessarily covered for whatever happens. In fact, “full coverage” will not cover any losses above your policy limits. Also, depending on your policy, “full coverage” may not cover additional drivers, rental cars, mechanical breakdowns, roadside assistance, and routine maintenance. Intentional damage is, of course, never covered.

Myth #2: Anything stolen from my car or damaged in an accident will be covered by my insurance.

Reality: Auto insurance does not typically cover theft of personal belongings.

If you have a habit of leaving your laptop in your car, don’t expect your auto insurance policy to cover your loss if someone breaks into your car and steals it. If you have comprehensive insurance, you can file a claim for the broken glass and other damage caused during the break-in, but it’s unlikely that your policy will cover personal items stolen from your vehicle. and you can also secure coverage for your valuable personal belongings by including them in your homeowners or renters insurance policy.

Myth #3: If I have a red car, my insurance rates will be higher.

Reality: It’s not the color. It’s you…and the car.

The color of your car doesn’t impact your insurance premiums. What matters are factors like your driving record, the make and model of your car, and your coverage choices. If you buy a sports car (regardless of color) it will likely cost more to insure than a sedan. Whether or not red cars get pulled over more is still up for debate.

Myth #4: I’m a safe driver, so if I get in an accident, it will be the other driver’s fault and their insurance will cover it.

Reality: About 11% of Oregon drivers are uninsured and your Uninsured Motorist coverage may not be sufficient.

According to the Insurance Research Council, about 11% of Oregon drivers do not carry insurance. Yes, the law requires we carry Uninsured Motorist coverage. Unfortunately, the minimum limits of UM coverage only cover up to $25,000 for one injured person and $50,000 for multiple injured individuals.

Myth #5: If my car is deemed “a total loss”, it must be destroyed.

Reality: It depends. And even if it is totaled, you have choices.

If the cost to repair your car exceeds its value, chances are your car will be totaled—even if there is not a lot of visible damage. When this happens, you will be given a written notice explaining the loss and instructing you what to do if you disagree (which you can do). If you decide to keep the totaled vehicle, your insurance company will likely pay you (or the lienholder) the difference between the vehicle’s value before the loss and the salvage value.

Myth #6: My insurance policy remains active even if I am late on my bill.

Reality: The grace period for late car insurance payments is surprisingly short.

If you miss a payment, your car insurance won’t be immediately canceled. Just be aware that in the state of Oregon, insurance companies can cancel your policy with just 10 days’ notice. Check the late payment policy and cancellation policy on your contract. If you think you might be late on a payment, contact your insurance company before the bill is due. Many agencies will be willing to move the due date or make other accommodations if you communicate your concerns in advance.  

Myth #7: My credit score doesn’t affect my insurance rates.

Reality: A low credit score may cause your insurance rates to rise.

In Oregon insurance companies may consider your age, ZIP code, marital status, gender, education, occupation, and credit score when determining your insurance rates. On average, drivers with poor credit (scores below 579) may pay as much as $100 more than drivers with very good credit (scores above 740). The good news is that this can work to your advantage if you have been rebuilding your credit. If your credit score has improved over the last few years and you have not asked for revised insurance rates, it’s worth asking for a re-evaluation.

Myth #8: I’ll get by fine with just the state-minimum liability insurance.

Reality: Depending on your vehicle or situation, you may be required to carry full coverage.

Oregon’s minimum insurance coverage limits address only what is legally required of drivers. If you have an auto loan or lease, you may need full coverage. What’s more, the minimum limits are often not enough to cover all the damages caused in an accident—and a discrepancy like that could leave you responsible for tens of thousands of dollars or more.

Myth #9: If an accident is not my fault, my insurance rates won’t go up.

Reality: Any claim you file could raise your rates.

This car insurance myth is only true if you don’t turn in a claim to your insurance company. If you are in an accident and the other driver pays out-of-pocket or has their insurance cover everything, your rates may not rise. Unfortunately, if you turn in a claim to your own insurance company there’s a risk of increased premiums—even if you aren’t at fault.

Myth #10: If my friend borrows my car, their insurance will cover the damage.

Reality: Perhaps! But you’ll still be on the hook.

In most cases, the car owner’s insurance is the primary coverage. So, if your friend gets into an accident in your car (and is found legally at fault), your insurance kicks in first. Your friend’s insurance is secondary and may cover some personal injury or medical expenses. It may also provide coverage beyond your insurance coverage if the cost of damages caused by your vehicle is higher than your policy limits.

Have questions? Give the Maps Insurance team a call at 503.779.1349. We’ll walk you through your options and help you bust any other confusing car insurance myths. Plus, as an independent insurance agency, we can provide you with multiple insurance quotes from multiple carriers. That way, you’ll never be under-covered and you’ll never pay more than necessary.

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