Insurance policies can be very complicated. Since confusion can be costly you want to be knowledgeable about different polices. Below are three of the most common car insurance myths.
- Red cars are the most expensive to insure. Red will not cost you more green. Roughly 25% of drivers surveyed by Progressive Insurance believe car color is a factor in determining insurance rates — especially if a car is red. But insurance companies will likely not even ask about the color of your car when they’re calculating your quote.
- Thieves are more likely to steal new cars. It’s actually the other way around. Statistics indicate that thieves actually tend to steal older cars. The main reason is because older cars are easier to steal.
- If my car is totaled, my insurance will pay off what I owe on my loan or lease. When your car is totaled, your policy does not promise to pay off what you owe. It will pay you the actual cash value of your car, minus your deductible. Actual cash value is the amount your car was worth before the accident, factoring in depreciation. You are still responsible for any amount outstanding on the loan or car lease. The only way to cover the difference between the car’s cash value and the amount you owe on a loan is to purchase gap insurance.