Top 5 Insurance Myths You Shouldn't Fall For

Jason Siu
by Jason Siu

A recent study has revealed common misconceptions with auto insurance.

With the help of Princeton Survey Research Associates International, surveyed 1,000 adults to find five common myths with auto insurance. According to Rob Hoyt, professor of risk management and insurance at University of Georgia’s Terry College of Business, “Most people don’t spend a lot of time and energy learning about insurance.”

SEE ALSO: 10 Things Your Insurance Company Knows About You

Sure, many consumers generally understand how insurance works, but others are mistaken in some pretty surprising ways. Find out the top five insurance myths you shouldn’t fall for below.

5. Red cars cost more to insure

Nearly half of those surveyed, 44 percent, mistakenly believed driving a bright red car increases or decreases the cost of auto insurance. According to the survey, drivers 18 to 29 years old were most likely to have this misconception. The fact is, the color of your car doesn’t affect your insurance premiums, although the kind of vehicle does. For example, a luxury German sedan will cost more than a standard American compact to insure.

4. Car insurance doesn’t cover you if you cause a crash

Only 56 percent of respondents correctly stated that auto insurance covers you when an accident is your fault. Overall, 37 percent of those surveyed and 52 of those between the ages of 18 to 29 incorrectly believed they would not be covered if they were at fault for an accident. Part of the confusion comes from consumers who only have liability insurance, which only covers damage done to others when they’re at fault in a crash, but doesn’t cover repairs or a replacement to their car. Those who need coverage to their own car even when they’re at fault need to opt for collision insurance.

3. If your car is totaled, your insurer cuts a check for the amount the car is worth after the crash

Half of those surveyed knew that their insurance company pays out what their vehicle is worth before a crash if it is totaled. Since it’s not a common occurrence, many policyholders aren’t aware of what happens when a vehicle is totaled, with 28 percent mistakenly believing that their insurance company pays only the post-crash value of the car, while 12 percent didn’t even know. For those unaware, insurance companies pay the market value of your car before the crash and some policies even offer new-car replacement.

2. Your auto insurer pays for mechanical repairs

Only 14 percent of those surveyed mistakenly believe that their insurance company covers general car breakdowns and mechanical repairs. But the bigger picture is 23 percent of those aged 18 to 29 believe insurance companies cover routine repairs, as well as 23 percent of those who make less than $30,000 per year. So unless your car is covered under warranty, you’re paying for repairs out of your pocket and your car insurance won’t be able to help.

1. Car insurance covers belongings stolen from your car

A little more one-third of respondents (34 percent) incorrectly believed that their auto insurance would cover personal items stolen from their vehicles. Of those surveyed, 47 percent older than 65 years of age believed they’d be reimbursed by their auto insurer if something is stolen from their vehicle. The truth is, renters or home insurance coverage is what will pay out if something is stolen from inside your vehicle, so long as what’s stolen is worth more than the deductible.

[Source: InsuranceQuotes]

Jason Siu
Jason Siu

Jason Siu began his career in automotive journalism in 2003 with Modified Magazine, a property previously held by VerticalScope. As the West Coast Editor, he played a pivotal role while also extending his expertise to Modified Luxury & Exotics and Modified Mustangs. Beyond his editorial work, Jason authored two notable Cartech books. His tenure at saw him immersed in the daily news cycle, yet his passion for hands-on evaluation led him to focus on testing and product reviews, offering well-rounded recommendations to AutoGuide readers. Currently, as the Content Director for VerticalScope, Jason spearheads the content strategy for an array of online publications, a role that has him at the helm of ensuring quality and consistency across the board.

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  • Smartacus Smartacus on Sep 22, 2015

    Hi Jason, does a radar-detector make your premiums go up or down? One time, a car insurance salesman asked me if i had a radar-detector.