3 Explained Common Car Insurance Myths
Some people are very misinformed not only about car insurance in general, but about their policy specifically. There are several myths in regards to your auto insurance that could potentially be problematic.
Here are the three most common car insurance myths; according to Allstate:
- Myth: Minimum Legal Requirement for Liability Insurance Coverage is Sufficient Protection
Most states do require at least liability coverage for you to be able to legally drive. Although you are at least driving legally, here is an example of what it could look like if you had the minimum coverage – then we’ll give you an actual accident example to see how this policy could work against your favor.
An example provided by Allstate looks like this,
- ~ "Bodily Injury Liability:
- ~Per-Person Limit: $25,000
- ~Per-Accident Limit: $50,000
- ~Property Damage Liability: $20,000 limit
- Myth: Comprehensive Coverage Covers All Damage to Your Vehicle
Fact: Comprehensive Coverage DOES NOT cover all damages to your vehicle.
If you didn’t already know, Comprehensive Coverage usually only extends to things such as: fire, theft, or any natural disasters. Basically, it’s a way to protect you and your car in case any accidents happen that are not collision related.
- Myth: Car Is Totaled, but it’s Okay because My Insurance Will Buy Me a Brand-New Car
Fact: Your insurance payout will take depreciation into account when covering a total loss.
Your coverage policy, typically has a limit equal to the cash-value of your vehicle.
For instance, if you have an older car and you happen to total it in an accident – don’t think you can go out and buy the newest model of your car because you’re covered.
Usually, if that’s the case and you drive a brand-new car, insurance providers will give you additional coverage just to protect this investment you made into a new car. This type of coverage only really applies to vehicles if they’re no more than a couple years old.
Ask your insurance provider questions like these, so you know more about your own auto insurance policy. You need to get the facts straight before getting into an accident.
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