There are many factors that play an important role in deciding your auto insurance premium amount. While most of the determinants are commonly considered by different insurance providers, some may differ. However, in the process to understand these factors, you my often come across some common beliefs about auto insurance, which are nothing but myths.
At the time of buying an auto insurance, it is important to know about the things that decide the price of your policy and it is equally important to differentiate between fact and fiction?
Below are some common myths about auto insurance -
At the time of buying an auto insurance, it is important to know about the things that decide the price of your policy and it is equally important to differentiate between fact and fiction?
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Below are some common myths about auto insurance -
Myth – 1: The colour of your vehicle decides the cost of auto insurance policy
One of the most common believes is that colour of your car is one of the deciding factor of your car insurance premium. In addition, the notion that red cars cost more to insure. However, the fact remains that, atleast till now, your insurance premium does not directly depend on colour of your car.
Your auto insurance premium is broadly based on the make, model, body type, engine size, the age of the vehicle, but probably not the colour of your vehicle. Your auto insurance premium may also depend on the age, driving record and credit history of the driver. The other factors that shall act as deciding factors for the price of your policy are the repair cost of your car, its safety record and the anti-theft provisions for it. Almost all insurance providers offer discounts for features that lowers the risk of injuries or theft.
Your auto insurance premium is broadly based on the make, model, body type, engine size, the age of the vehicle, but probably not the colour of your vehicle. Your auto insurance premium may also depend on the age, driving record and credit history of the driver. The other factors that shall act as deciding factors for the price of your policy are the repair cost of your car, its safety record and the anti-theft provisions for it. Almost all insurance providers offer discounts for features that lowers the risk of injuries or theft.
Myth – 2: Your car insurance rate is independent of your credit score
Your credit score gives an idea about your financial stability and management. There might be possibilities that many insurance companies may consider your credit score before offering you a car insurance.
Myth – 3: The minimum amount of liability auto insurance, mandatory by law, is sufficient
Nowadays having auto insurance is compulsory in most of the countries. Thereby, the myth states that having only the minimum amount of auto insurance, as mandated by law, is sufficient.
However, factually, because accidents cost more, you will require more liability insurance than what has been mandated by law. In case of accidents, it has been often observed that many people opt for only minimum required amount of auto liability insurance and end up paying more out of their pocket.
However, factually, because accidents cost more, you will require more liability insurance than what has been mandated by law. In case of accidents, it has been often observed that many people opt for only minimum required amount of auto liability insurance and end up paying more out of their pocket.
Myth – 4: Someone else driving your car will be covered under his/her auto insurance, in case of an accident
Many believe that your insurance policy will cover only you and your car or a third party. However, there are policies which offer coverage for drivers who are not owners. Therefore, if your policy has such a cover then even if your car is been driven by someone else, in the event of an accident he/she shall get cover under your policy. The losses incurred during this event by your vehicle too shall be covered by your insurance policy. Therefore, do not let anyone drive your car if you are not familiar with his/her driving record.
Myth 5 – Private auto insurance policy covers both personal & business use of your car
Your private car insurance will cover you only for your personal usage and not business. If you use your car for business purpose, you will require a passenger carrying vehicle insurance or goods carrying vehicle insurance.
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