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Auto Insurance Myths – Learn Before You Buy

Saturday, May 14th, 2016 - Auto Insurance

Auto Insurance Myths – Learn Before You Buy

Many drivers are having doubts regarding auto insurance. In fact in USA auto insurance is a must to drive cars, used cars. This informative article gives valuable information in relation to auto insurance:

  • Increase your knowledge on vehicle insurance
  • Is fuller insurance policy is needed for vehicle used for business purposes?
  • Test your knowledge on deductible

Many drivers – even those who have been licensed for years – unknowingly believe in many car insurance myths. These myths could easily end up costing you a lot of money, which is why it is important to sort out the facts from fiction.

Vehicle Insurance Question: Why are auto insurance rates so expensive?

Answer: Insurance rates are set by insurance companies and many factors go into the decision. While companies would like to offer the most affordable insurance possible, they need to make sure that they can cover your costs or the cost of any accidents or damage to the cars they have insured. Of course, these companies also need to show a profit, pay their employees, and function as a company. All these things cost money, forcing the insurance companies to keep rates at a specific level. The more accident and insurance claims are filed, the more the company has to charge. Insurance providers also use statistics to determine how likely specific drivers are to file a claim. If you are considered high risk, you will pay more in insurance because you are more likely to cost the insurer money.

Vehicle Insurance Question: Do I really need insurance? I can’t afford it.

Answer: Yes, you really need insurance. Anyone – even the most cautious driver – can be affected by theft, vandalism, or an accident. In such a case, an uninsured driver may have to pay all related costs from their own savings. Since driving without insurance is not legal in most states, not being insured can also cause you serious legal problems. If you think you cannot pay for insurance, then you cannot really afford to drive. According to some industry experts, car insurance is more important to your car than the gas you put in your car tank! If you are having a hard time making your insurance payments, it is much wiser to sell your car, get an affordable model and insure it than drive without coverage.

Vehicle Insurance Question: What is a vehicle insurance policy?

Answer: A policy is the agreement that you sign with an insurer. To keep the policy in place, you will have to pay a specific amount each month. In turn, the policy will outline your coverage or how much the insurer will need to pay you if anything happens to your car.

Vehicle Insurance Question: Are all cars insured the same way?

Answer: In short, no. Vehicles used for recreation have special needs and are often insured on special policies. Classic and vintage cars are more expensive to repair or replace so that they, too, have specific policies and coverage options. If you have a leased car, you have the option of getting special coverage that lets you pay for the vehicle even if it is ruined in an accident. The truth is, there are special coverage options and insurance possibilities for you no matter what kind of car you drive. A good insurance agent can help you find the perfect options for your lifestyle and your auto.

Vehicle Insurance Question: I use my car for business. Do I need special insurance?

Answer: You need insurance on your vehicle whether you drive it for business or recreation. However, if you use your car for business, you may spend more time in your car. If this is the case, you may need a fuller insurance policy that can really protect you in case of an emergency. Also, you will want a very, very good liability coverage on your motor vehicle insurance. Otherwise, injured parties could sue your business in order to recoup their medical costs and other expenses.

Vehicle Insurance Question: Will my insurance rates go up?

Answer: Although no one can predict the future, it is true that insurance rates tend to rise rather than otherwise. Insurance companies are affected by inflation just like any other business, causing them to increase prices. Also, the more cars are on the road, the more dangerous the road becomes and the more risk the auto insurance provider needs to account for.

Vehicle Insurance Question: What is a deductible?

Answer: A deductible is the amount you agree to pay in case your car is damaged or totaled. If your deductible is $500, for example, and you are in an accident, you need to pay $500 towards the cost of your car repair. If the total amount of repairs is higher than this amount, your insurance provider will pay the rest of the bill, up to the coverage amount you decided upon when you signed your vehicle insurance policy. In general, you will want to get the highest deductibles you can reasonably afford, since higher deductibles mean that you pay less on insurance each month.

Vehicle Insurance Question: I have an extended warranty, a new car and a membership with my local AAA, I don’t still need auto insurance, do I?

Answer: Yes. A warranty only covers damage to your car – and often imperfectly, at that. It will not cover the medical costs of anyone injured by your car and it will not cover the cost of replacing your car if your car is damaged beyond repair or is stolen. Automobile clubs are useful for towing and general help but they, too, do not cover the many potential car problems that auto insurance protects you from. Plus, even if you have warranties, a new car with dealership servicing, or an AAA membership, you still need insurance on your vehicle in order to legally drive in most states.

Understanding these facts about car insurance can help you decipher your vehicle insurance policy and can help you understand your auto insurance premiums as well. When it comes to your vehicle insurance, you will want to know all the facts so that you can keep both yourself and your car safe.

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