Insurance is a very complex product and since it is mandatory in most states, there are many misconceptions in the market place that could leave you in a tough situation. Before you buy a policy, or even after you purchase it, it is always good to read through each line of coverage to make sure you understand your coverage.
A few of the common misconceptions that consumers have about insurance:
I thought I had full coverage on my policy – In reality, there is no such thing as, full coverage. This term is often used to describe having comprehensive and collision coverage on your vehicle, but consumers often misconstrue this as being covered for all damage in all situations. For instance, just because you have comprehensive and collision coverage on your policy, it does not mean that you automatically are covered for custom parts on the car, rental coverage or even glass damage.
I can use my rental coverage when my car is in the shop for mechanical repairs – When your car is in the shop, you may need a rental to get around, but if you think your insurance covers this then think again. Your insurance policy will only cover the expenses for a rental car if you have a covered claim and only if you opt in to this coverage when you purchase the policy. In addition, be sure to know what level rental coverage you are purchasing, because each will have daily and maximum limits.
If I buy a bright color car, my insurance will cost more – False. The color of your car will make no difference in your insurance rates. Different companies will rate their drivers different ways, but never on your car color. Factors such as your driving history, your credit, the year, make and model of your vehicle and how long you have been with the company will drive the cost of the insurance.
If I have belongings in my car and they are stolen, my auto insurance will cover it- Think again. Your auto insurance policy does not cover personal belongings in your car. Often times if you have a home insurance or renter’s insurance policy, it will be covered, but never on a typical auto insurance policy.
My personal auto insurance policy will cover me if I am a food delivery driver – If you are a food delivery driver, you will want to make sure you either are covered on your place of employment’s policy or you have a business/commercial policy. If you file a claim and the insurance company finds out that you were driving deliveries, you may not only be hit with an insurance fraud charge, but the company will most likely deny the claim.
My credit score has no effect on my insurance premium – Most companies now a day are using your insurance score as a rating factor, which is a soft hit on your credit. You may wonder why your credit has anything to do with your driving, but there have been multiple studies that prove a correlation between the likelihood of someone with bad credit to file more claims. It may seem unfair, but there are ways you can improve your insurance premium without having to improve your credit score.
There are hundreds of misconceptions out in the marketplace about insurance. The best way to protect yourself as a consumer is to research a company and your policy before buying it. If you currently have a policy, don’t be afraid to call your Agent or company and ask them to walk you through your coverage.
What is your favorite insurance misconception?