Do you think you know everything about auto insurance? Think again! Most drivers don't realize the importance of proper coverage and often fall into the pothole of being uninsured when they need it most. Some end up overpaying, while others face claim denials or unexpected accidents that lead to financial constraints. These issues often stem from a lack of basic knowledge about auto insurance. In this blog, we will share 10 must-know facts about auto insurance that could save you big bucks and protect you from expensive mistakes.
-
Your Credit Score Affects Your Premium
Believe it or not, your credit score plays a big role in determining your auto insurance rates. Insurance companies see a lower credit score as a sign of financial instability, which could lead to higher claims. Improving your credit score is a great place to start if you want to lower your premiums.
-
Red Cars Don’t Cost Much to Insure
There's a common myth that red cars are more expensive to insure, which is entirely false! Insurance companies don't care about the color of your car. What matters more is the vehicle's make, model, year, and safety features.
-
Minimum Coverage May Not Be Enough
Many drivers opt for the cheapest insurance required by law, but this can be a costly mistake. If you cause a major accident, minimum coverage might not cover all damages, leaving you financially responsible for the rest.
-
Your Location Matters More Than You Think
Where you live plays a significant role in your premium. Areas with high crime rates, frequent natural disasters, or heavy traffic will likely result in higher premiums. Even moving just a few miles away could significantly impact your rates.
-
Comprehensive & Collision Coverage are Not the Same
Comprehensive coverage protects against theft, vandalism, and natural disasters, while collision coverage pays for damages caused by accidents. Many drivers assume these cover all situations, but knowing the difference can help you decide which coverage you really need.
-
Insurance Covers Not Just You and Your Car
If not only you and your vehicle, then who? It also protects family members listed on the policy, permissive drivers you allow to drive your car occasionally, and passengers in the insured vehicle, depending on the coverage type.
-
Your Car Insurance WON’T Cover Items Inside the Vehicle
Car insurance generally doesn’t cover personal belongings inside your vehicle. However, if your car is stolen or broken, your homeowners or renters insurance may cover those items.
-
Overlooking Gap Insurance May Be Expensive
Gap insurance covers the difference between your car's loan amount and depreciated value if it's totaled or stolen. Without it, you could owe more than your insurance payout. However, not all insurers offer gap coverage, and it’s often limited to new cars. So, always check with your agent when shopping for insurance.
-
Never Stick to the First Car Quote
Failing to compare car insurance rates can be an expensive mistake. Insurers calculate premiums differently, leading to significant price variations for the same coverage. It's always advisable to gather quotes from multiple companies to find the best deal and also consider every insurer’s reputation, customer service, and policy details.
-
Discounts Exist—But You Have to Ask!
Many insurers offer discounts for bundling policies, maintaining a clean driving record, taking defensive driving courses, or even being a good student. However, these discounts aren't always advertised. Make sure to ask your provider about all potential savings opportunities.
Auto insurance is undoubtedly a vital investment that provides financial protection against unexpected turns on the road. Before you sign on the dotted line for your next auto insurance policy, patiently read these 10 facts to save time, money, and unnecessary headaches. So, buckle up your knowledge like a seatbelt because staying informed is the best and smartest protection on the road.