Shopping for car insurance can be a stressful experience, and if you want to get the best value out of your auto insurance budget, there are some facts that you should know. When you’re purchasing an auto insurance policy, you need to understand the factors that will affect your policy costs and the coverage. The unfortunate news is that there is a lot of information that gets passed around as ‘common wisdom,’ but you don’t need to worry as we separate myths from facts related to car insurance right here.

So, without further ado, let’s look at some car insurance myths that you should know about to ensure that you end up purchasing the right auto insurance for yourself.

1. Color Determines the Price of Auto Insurance

It doesn’t matter what type of color your car has, whether it is red or plain white. What’s important to note is that the color doesn’t affect the car insurance costs of your policy. That’s because your auto insurance policy’s price is based on various factors, which include the make, model, engine size, body type, and age of the vehicle. The sticker price, the cost to repair it, the overall safety record, and the likelihood of theft all factor into the price of your auto insurance.

Most insurers will also take into account the age, the driving record, and sometimes the credit history of the driver to determine the price of the auto insurance.

2. It Costs More to Insure Your Car as You Get Older

This is quite the opposite. Older drivers may be eligible for special discounts. For instance, those over age 55 can get a reduction in their auto insurance premiums if they manage to successfully complete an accident prevention course.

Those who aren’t employed full-time or retirees, and therefore, are driving their car less may also be eligible for a car insurance discount. Older driver programs and discounts tend to vary by state and insurance carrier, and driver age. If you think that you qualify for a discount, you should check with your insurance professional.

3. The More Expensive the Car, the More It Costs to Insure

Your insurance costs aren’t determined by the price tag on your vehicle. However, your premiums can be influenced by characteristics such as the vehicle model’s loss history and how much your vehicle costs to repair. If your car model is associated with more traffic infractions or accidents or is costly to repair, then it may be more expensive to get it insured.

4. Your PLPD Insurance Will Cover You If Your Car is Stolen, Vandalized, or Damaged by Falling Tree Limbs, Hail, Flood, or Fire

PLPD (commonly referred to as “No-Fault” insurance) does not cover if your vehicle is stolen or if physical damage is caused to your vehicle resulting from vandalism, falling objects, fire, hail, or flood. In order to have these losses covered, you would need to elect to have comprehensive coverage.

If a car is worth less than $1,000 or is less than 10 times the insurance premium, purchasing these coverages may not be a cost-effective solution. However, you do need to have collision and comprehensive insurance if you want to fully protect your vehicle from all physical damage losses.

5. You Only Need the Minimum Amount of Auto Liability Insurance Required by Law

It is required in almost every state that you purchase a minimum amount of liability coverage. However, buying only the minimum amount of liability means that you are likely to pay more out-of-pocket for losses incurred after there has been an accident, and these costs can be quite expensive.

The insurance industry and consumer groups generally recommend a minimum of $100,000 of bodily injury protection per person and $300,000 per accident. If you have substantial personal financial assets to protect in the event of a lawsuit, you can even consider an umbrella liability policy.

6. If Another Person Drives Your Car, In the Event of an Accident, Their Auto Insurance Will Cover the Damages

In most states, the auto insurance policy covering the vehicle is considered the primary insurance. This means that the car owner’s insurance company needs to pay for damages caused due to an accident, irrespective of who is driving. The laws and policies will differ by state, so you must understand the rules before you allow another person to drive your car. Give your agent a call to see what exactly is covered in your policy.

7. Active Duty Soldiers Pay for More Insurance Than Civilians

If you’re in the military, irrespective of which branch, you may qualify for a discount on auto insurance with certain carriers. You will need to supply documentation that lists your name, rank, and the time that you will enlist in the service. In some instances, you may be able to have your commanding officer make a phone call on your behalf. You should shop around, as some auto insurance companies will provide discounts for veterans of the military and their families.

8. Personal Auto Insurance Also Covers Business Use of Your Car

If you’re self-employed and use your vehicle for business purposes, personal auto insurance may not protect you, which is why it is important to purchase business auto insurance. If you have other people who use your vehicle, like employees, you should check their driving records regularly to ensure that they are covered properly by your business auto insurance policy.


So, there you have it, all the different myths that impact most people’s decision making when it comes to purchasing auto insurance. Hopefully, now that we have debunked some of these myths, you can properly buy auto insurance for yourself and your family.