Top 5 Myths About Car Insurance – Debunked
Car insurance is one of those topics that almost every driver deals with, but few truly understand. Because of its complexity, many myths and misconceptions circulate among drivers, often leading them to make poor financial decisions or miss out on important coverage. Believing in these myths can result in overpaying for policies, not having the protection you think you do, or even facing trouble after an accident.
In this article, we will dive into the top five car insurance myths, break them down, and reveal the truth behind each one. By the end, you’ll have a clearer understanding of car insurance and be better equipped to make smarter decisions about your policy.
Myth #1: The Color of Your Car Affects Your Insurance Rates
Why People Believe This Myth
One of the oldest and most widespread misconceptions is that red cars cost more to insure. Many people assume that flashy colors like red or yellow are associated with speeding or reckless driving, leading insurers to charge higher premiums.
The Truth Behind the Myth
The color of your car has no impact on your insurance premium. Insurance companies don’t ask for the color of your vehicle when calculating rates. Instead, they focus on:
The make, model, and year of the car
The engine size and safety features
The repair costs and theft rates associated with that vehicle type
Your driving history and record
Where you live and how often you drive
What Actually Matters
If you own a sports car that happens to be red, your insurance may be higher—not because of the color, but because sports cars are riskier to insure. In other words, a red minivan won’t cost more than a blue one.
Myth #2: Your Insurance Covers You No Matter Who Drives Your Car
Why People Believe This Myth
Many drivers assume that if they have car insurance, their policy automatically covers anyone they allow to drive their vehicle—whether it’s a family member, friend, or coworker.
The Truth Behind the Myth
Car insurance generally follows the car, not the driver. This means that if someone borrows your car and gets into an accident, your insurance will likely be the one covering the damages—not theirs. However, this comes with important caveats:
Some policies only cover permissive drivers (those you’ve allowed to drive).
If the driver lives with you but isn’t listed on your policy, the insurer might deny the claim.
If the driver is excluded from your policy, there will be no coverage at all.
What You Should Do
Always check with your insurance provider about their policy regarding other drivers.
Add frequent drivers, like family members, to your policy.
Avoid lending your car to someone whose driving record could put your insurance at risk.
Myth #3: Older Drivers Always Pay Less for Car Insurance
Why People Believe This Myth
It’s a common belief that as you grow older and gain experience behind the wheel, your insurance rates automatically decrease. After all, younger drivers (especially teenagers) are considered high-risk.
The Truth Behind the Myth
While it’s true that teenagers and young adults pay the highest premiums, insurance rates don’t continue to drop forever. In fact:
Rates often level out once drivers reach their 30s and 40s.
As drivers enter their senior years (usually after age 65 or 70), rates may increase again due to higher accident risks, slower reflexes, and health issues.
What Really Affects Age and Rates
Experience plays a major role, but it must be combined with a clean driving record.
Location matters—some states give discounts to senior drivers who take refresher driving courses.
Vehicle type also influences costs, regardless of age.
So while older drivers may enjoy lower rates than younger ones, it’s not a guaranteed lifelong discount.
Myth #4: Minimum Liability Coverage Is Enough
Why People Believe This Myth
Many drivers want to save money and believe that state minimum liability coverage is sufficient protection. Since it’s legally required, they assume it must cover all situations.
The Truth Behind the Myth
Minimum liability coverage only covers damages to other people and their property if you’re at fault in an accident. It does not cover:
Your own car repairs
Your medical bills
Uninsured or underinsured drivers who hit you
Theft, vandalism, or natural disasters
If the accident costs exceed your liability limits, you’re responsible for paying the rest out of pocket—which could lead to financial ruin.
Why Comprehensive Coverage Matters
Adding collision and comprehensive coverage ensures that your car is protected, regardless of fault. While it costs more upfront, it can save you from massive expenses in the long run.
Myth #5: Your Credit Score Has Nothing to Do With Car Insurance
Why People Believe This Myth
Most drivers assume that credit scores are only relevant for loans, mortgages, and credit cards. They don’t realize insurers may also use this information.
The Truth Behind the Myth
In many states, insurance companies use a credit-based insurance score to help determine premiums. Studies show that people with lower credit scores are statistically more likely to file claims.
However:
Not all states allow this practice. For example, California, Hawaii, and Massachusetts ban the use of credit scores in setting auto insurance rates.
Your credit score isn’t the only factor—it’s just one piece of the puzzle.
How to Improve Your Insurance Rates
Pay bills on time to boost your credit score.
Regularly check your credit report for errors.
Shop around for insurers, since some weigh credit history more heavily than others.
Additional Common Myths Worth Mentioning
Myth: Comprehensive Coverage Covers Everything
Despite its name, comprehensive coverage doesn’t cover “everything.” It only protects your car against non-collision events like theft, fire, or weather damage.
Myth: Expensive Cars Always Cost More to Insure
Not necessarily. Sometimes, luxury vehicles have better safety features that lower insurance costs compared to older, less safe cars.
Myth: Insurance Will Pay Off Your Car Loan If It’s Totaled
Insurance only pays the current market value of your car—not the amount you owe on a loan. If your loan balance is higher, you’ll still be responsible for the difference unless you have gap insurance.
How to Separate Fact from Fiction
Do Your Research
Relying on word-of-mouth or assumptions can be dangerous. Always check official resources, such as your state’s insurance department or your insurer’s website.
Ask Your Insurance Agent
Insurance policies vary widely depending on your provider and location. Asking questions directly is the best way to avoid confusion.
Review Your Policy Regularly
Life circumstances change—moving to a new city, buying a new car, or adding a family member can all affect your coverage needs.
Conclusion
Car insurance myths have a way of spreading quickly, but they can lead to costly mistakes if you believe them. The truth is that insurance premiums are influenced by multiple factors—from your driving record and location to the type of car you own and even your credit score.
By debunking myths like “red cars cost more” or “minimum liability is enough,” drivers can make informed decisions that protect both their vehicles and their financial future. The key takeaway is simple: don’t rely on myths—rely on facts.