If you own a vehicle, chances are you have a car insurance policy — coverage is legally required in nearly every state. But how well do you understand your car insurance? Myths and misunderstandings abound but fear not. Bankrate is here to help you navigate the confusion. We’re using our combined 47 years of insurance experience to bust 10 of the most common car insurance myths — things we heard time and again when working in various insurance industry positions — to help you better understand how your coverage works.


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10. If someone else drives your car, they cover any damage

Kicking us off at number 10 is the myth that insurance follows the driver, not the car. Wrong; it’s the other way around. Car insurance follows the car, not the driver. If you loan your car to a friend and they cause an accident, your policy will be the primary insurance. Your friend’s policy could kick in secondarily, but only if the limits on your policy were used up. Some policies may have driver exclusions, too, which could mean that no one else is covered to drive your vehicle, so be sure you understand how your policy works before you give permission for someone to drive your car.

9. Drivers with red cars pay more for insurance

The theory goes that drivers of flashy red vehicles are more likely to engage in risky driving behaviors and pay more for car insurance. Thankfully for anyone who owns a red car, this is a complete myth. The truth is that your car insurance company probably doesn’t know what color your car is. Color isn’t a piece of information that car insurance companies use to rate your policy. The exception would be if you are paying extra for coverage on a custom paint job, but even then, the extra price isn’t so much about the color as the custom paint itself.

8. New cars are more expensive to insure

This isn’t always true, but it’s still a bit tricky because there are many different facets of a car’s age that impact rates. First, new cars are more likely to have advanced safety features that could reduce the risk of an accident and reduce the likelihood of serious injury if one does occur. Both those things could lower your rate. Newer cars are often eligible for a new vehicle discount, which can offer savings on your car insurance premium. However, newer cars are also probably more expensive to repair or replace, which could increase rates compared to an older model. Finally, newer cars are more likely to need comprehensive coverage and collision coverage than older cars, and more coverage generally means higher premiums. The age of your car does affect your rate in several ways, but it’s not as simple as “new cars are expensive to insure.”

7. A not-at-fault accident won’t affect my rates

If the other driver’s coverage takes care of everything and you don’t turn in a claim to your insurance company, or if you and the other driver handle the issue out of pocket, this should be true. Unfortunately, if you turn in a claim to your insurance company — even if you aren’t at fault — there’s a risk that your premium could increase. You shouldn’t be penalized or surcharged for the claim since it wasn’t your fault, but if you have a claim-free car insurance discount, you could still lose it, which may result in a higher premium.

6. All car insurance companies are the same

Far from it! While most car insurance companies offer similar coverage, other factors set them apart. Each company has its own rating system, which means you’ll get different rates from different companies even for the same coverage. Different companies also have different endorsements. Some common add-ons exist, like car rental coverage and roadside assistance coverage, but you may be looking for a company with a more specialized option, like ridesharing insurance. Discounts are similar — you’ll likely find common discounts with most insurance companies, but some carriers offer more unique savings. Some companies have local agents, while others do everything digitally. Finally, third-party customer satisfaction scores and financial strength ratings vary widely, and these can help you develop a well-rounded view of a carrier.

5. Your quote is what you will pay

A quote is just that — a quote. Many companies will give you a car insurance quote based on the information you provide. If that information isn’t accurate, your quote could change when you are ready to purchase the policy. Auto insurance companies pull two reports — a Comprehensive Loss Underwriting Exchange (CLUE) report and your Motor Vehicle Record (MVR) — before presenting you with the final price and allowing you to purchase coverage. These reports show your history of insurance claims and traffic incidents. If you didn’t include this information on your quote, or if the information you included wasn’t correct, you’ll likely see an increase in your final price.

4. You only need minimum coverage

While you only need your state’s minimum coverage levels to drive legally, you may still need more coverage depending on your situation. If you have a loan or lease on your vehicle, you’ll likely be required to purchase full coverage. Even if you own your vehicle in full and could legally drive with just the state minimum coverage, purchasing higher liability limits is usually a good idea. The price difference generally isn’t huge and you gain a lot more financial protection.

3. Full coverage covers everything

“Full coverage” is an industry term that means your policy includes comprehensive coverage and collision coverage, which cover damages to your vehicle from various perils. But having a full coverage policy doesn’t mean you are covered for every eventuality. Intentional damage, for example, is never covered. Your policy may also have exclusions about who can drive your vehicle, what types of vehicle use are covered and what countries your vehicle is covered in. When reviewing your coverage with an insurance agent, discuss your policy’s coverage options. Everyone’s interpretation of full coverage is slightly different, and you want to ensure you have the coverage you expect.

2. You don’t need medical payments if you have health insurance

If you’re trying to save on your car insurance, you might be considering skipping medical payments coverage, especially if you have health insurance. This isn’t a great strategy. Medical payments coverage covers your and your passengers’ medical costs if you’re in an accident, regardless of fault. In some states, personal injury protection (PIP) is available (often required) in lieu of medical payments coverage. Even if you live in a state where these coverage types are optional and have health insurance, you should still consider buying the available option. Limitations on your health insurance policy may leave you with out-of-pocket costs. Your medical payments coverage might help cover your health insurance deductible, too. And in states where PIP is available, you may get more than just covering medical bills, like help with childcare costs, household responsibilities or lost income.

1. You can negotiate your premium

Pass the mic so we can say it loud: False! Negotiating the price you pay for car insurance is impossible. Car insurance companies use proprietary algorithms to determine how much risk you present, and your rate reflects your risk level. If you get a lower rate from another company, that company’s algorithm views you as a lower risk. You can’t take that lower quote to other carriers and expect them to match it; those carriers can’t change their rating algorithms to get or keep your business. You can influence your premium by choosing appropriate coverage and utilizing discounts, though, so there are ways you can get your price down.

The bottom line

Car insurance can be complex, which has resulted in misunderstandings cropping up. Knowing the truth about car insurance is important to make informed decisions about your coverage. Plus, now that you know the truth about common car insurance myths, you can help set the record straight whenever the topic comes up.