Basil is the CEO of Coverhound.com. He writes weekly articles for the CarWoo! blog about how to find the best deals on auto insurance.
Working in the insurance industry, we get a lot of customers who come to Coverhound with misconceptions about the prices or coverage they’re going to get from their insurance. So I’ve decided to write an article to clear up some of the most common myths:
#1 Myth About Auto Insurance: You Can’t Shop for New Insurance Until Your Current Policy has Expired
If your insurance policy isn’t really working for you, or if you come across a deal you can’t miss, you can cancel your current insurance at any time. You sill may have to pay a fee. Fees vary by state and insurance carrier, but many charge 10% of the unused premium. So, for example, if you got a 6-month insurance policy for $600 and canceled it after 3 months, you may have to pay a $30 fee. But insurance shoppers, such as those who use Coverhound, sometimes save up to $300 – which definitely compensates for the loss in fees.
#2 Myth About Auto Insurance: Working Directly with an Insurance Company is Cheaper than Using an Agent
Many insurance shoppers assume that they’ll save more money by working with a direct company because they won’t be paying any fees to an agent. However, since they don’t have agents to market locally, direct companies usually have to pay more for advertising, so the fees may still be higher for this reason. Additionaly, insurance rates can be so variable that it’s difficult to determine where you’ll get the best deal without shopping around.
#3 Myth About Auto Insurance: If You Let a Friend Borrow Your Car, Your Vehicle Will Not Be Covered Against Damages
This rumor is basically just … not at all true. The only way this would occur would be if you’d explicity excluded your friend from you policy. Otherwise, comprehensive and collision coverage will take care of any damages to the vehicle, just as if you’d been driving it. However, it won’t protect your insurance rates from going up.
#4 Myth About Auto Insurance: Your Auto Insurance Rates Will Go Down Automatically After You Turn 25
Though it’s true that people over the age of 25 are statistically less likely to be involved in an accident, every insurance company handles pricing calculations differently. Some companies may lower rates after the client turns 21 or 23 or even 30. Plus, there are many other factors that may decrease insurance rates, such as bundling a Homeowners or Renters policy with your auto coverage, paying your premium all at once or even opting for paperless billing. Check with your insurer for all possible discounts – you may be surprised.
#5 Myth About Auto Insurance: Comprehensive Insurance Coverage Covers Theft of Your Car and Any Items in Your Car
Comprehensive coverage covers your car and any item physically attached to your car. This means that a GPS may be included in coverage, but iPods, clothes, CD’s would not be. You’d actually need homeowners or renters insurance instead. Your car insurer may have these policies that you can buy.