Oklahoman drivers need to steer clear of common auto insurance myths. Understanding the facts about auto insurance can help drivers make better decisions, which will save money, strengthen relationships and enrich lives. Below are 37 common auto insurance myths and explanations of why they aren’t true:
Myth #1: Vehicle colors affect the price of auto insurance.
Fact: It doesn’t matter whether your car is “Speed Racer Red” or “Highway Grey.” The color doesn’t affect auto insurance costs. Insurers consider other information about the vehicle, such as car make, model, body type, engine size, the age of the vehicle, sticker price, the cost to repair it, its overall safety record and the likelihood of theft. The price of auto insurance is also determined by information about the driver(s), including the age, driving record and credit history.
Myth #2: Letting your coverage lapse will save you money.
Fact: Canceling or not renewing an auto insurance policy can potentially cost more in the long term than the money saved during the period of not paying premiums. You’ll probably pay a higher rate when you start a new policy because of the lapse in coverage. Over the course of a year, this higher rate could be more than what you saved during the lapse. If you drop your auto insurance while you’re still driving, you could get a ticket or get in an accident, which will also cost you much more than you saved. Don’t cancel your auto insurance immediately after an accident either! Just because your vehicle may have been totaled, that doesn’t mean you won’t be driving another vehicle within a few days or weeks.
Myth #3: Added rental car coverage means you’re protected in rental cars.
Fact: When you add “rental car coverage” to your personal auto insurance policy, it’s actually “loss of use” coverage that helps pay for a rental car to use after a covered accident or claim. It doesn’t cover damage to and while driving a rental car. Your current personal auto policy coverages should always cover accidents in or damage to a rental car, depending on if you have liability only or comprehensive and collision coverages.
Myth #4: You can negotiate auto insurance rates.
Fact: Unfortunately, auto insurance rates aren’t negotiable. However, you can lower your premium if you qualify for available discounts. Insurance carriers offer lots of discounts to help bring down the cost of auto insurance. Each rate depends on the carrier, but common discounts include multi-policy, multi-car, good student, homeowners, pay-in-full, accident free and long-term client discounts.
Myth #5: Auto insurance costs more as drivers get older.
Fact: Older drivers actually have opportunities to pay less for auto insurance. Many carriers offer special discounts for older drivers, which help lower their premiums. Discounts are available to older drivers for driving less, living in retirement communities, completing an accident prevention course and being members of associations such as AARP.
Myth #6: Your auto insurance company can cancel your policy at any time.
Fact: Oklahoma state regulations require insurance carriers to have adequate grounds in order to cancel a policy in the middle of a term. Some reasons include non-payment and fraud. If you have a valid driver’s license and are paying your premiums, you have little to worry about. However, they can non-renew your policy, but this only happens at the end of your policy term. Some reasons for non-renewal include having too many claims or violations.
Myth #7: Full coverage covers everything.
Fact: “Full coverage” isn’t an official insurance industry term. An insurance policy that covers everything doesn’t exist. However, it’s probably the most over-used and misunderstood insurance term. If you ask 100 people what “full coverage” means, you’ll probably get dozens of different definitions.
In general, “full coverage” is commonly referred to as a combination of liability, comprehensive and collision coverages, but many people have different assumptions of what it means. Even when people say they have “full coverage, they still have limits on what is covered. It’s important to understand the limits and features of each coverage on your policy. Review your policy to see which coverages you have and the limits of each. Below is a list of common coverages available for an auto policy.
- Bodily Injury Liability – Can help cover medical and legal expenses for bodily injury to others.
- Property Damage Liability – Can help cover repair & replacement and legal expenses for property damages to others.
- Medical Payments – Can help cover medical expenses for bodily injury to your passengers.
- Uninsured/Underinsured Motorists – Can help cover medical expenses for bodily injury to your passengers if you’re hit by an uninsured/underinsured driver or hit & run driver.
- Collision Coverage – Can help cover repair/replacement of your own vehicle after a collision.
- Comprehensive Coverage – Can help cover repair/replacement of your own vehicle after a theft, vandalism, fire, flood, hail or other non-collision loss.
- Full Glass Coverage – Can help cover replacement of windshield and windows after a theft, vandalism, hail storm or other covered loss.
- Roadside Assistance – Can help cover the expense of being towed, jump starting a battery, if you locked your keys in the car, or ran out of gas and need a few gallons brought out to you.
- Loss of Use (Rental Car) Coverage – Can help cover the expense of renting a car while your car is being repaired or replaced after a covered loss.
- Gap Coverage – Can help cover pay off your car loan after a covered loss.
Myth #8: You don’t have to pay your car payments if your car is totaled in an accident.
Fact: You are required to continue making your car payments even if your car is totaled. A car loan is a contract. When you get a car loan, the lender agrees to loan you money to buy a car and you agree to pay the monthly payments until the loan is paid back.
Myth #9: Your credit has no effect on your insurance rate.
Fact: Most insurance carriers consider credit scores when determining insurance rates. Credit scores have been shown to be a good predictor of how likely people are going to file insurance claims. In general, people with good credit often end up paying less for insurance.
Myth #10: Expensive cars cost more to insure.
Fact: Some mid-priced vehicles may have higher insurance premiums than expensive vehicles if they have a high loss history and cost more to repair than expensive ones. Insurance carriers have a large, detailed database of vehicles and their loss histories for each. They consider how many claims they’ve paid on each model, along with how much it might cost to repair or replace it, when determining how much to charge for collision and comprehensive coverage.
Myth #11: If your car is totaled, insurance will pay for your new car.
Fact: Auto insurance carriers compensate for total losses of vehicles at “Actual Cash Value” (ACV), not “Replacement Cost” (RC). Actual cash value includes depreciation, which is the decreased value of an item over time from age and wear and tear. In other words, an insurance carrier compensates for what a car was worth right before the accident, not a new version of it.
Myth #12: You won’t be responsible for your deductible if another party is at fault for an accident.
Fact: Typically, if you have collision coverage, you’ll probably pay your deductible to fix your vehicle after an accident, but will be reimbursed for your deductible later. Your insurance carrier will attempt to collect from the at-fault driver’s carrier if you are not at fault in an accident to help cover the cost of repairing your vehicle. This process may take some time, so it’s a good idea to have some money saved up in case you have to pay your deductible upfront.
Myth #13: Your insurance will cover you if your car is stolen, vandalized or damaged by falling tree limbs, hail, flood or fire.
Fact: Comprehensive coverage is the only coverage that protects you from theft, vandalism, falling objects, hail, flood or fire. If you don’t carry comprehensive coverage on your auto policy, your vehicle isn’t protected from these perils.
Myth #14: Your car insurance rates will skyrocket after you get one ticket.
Fact: Just because you get one ticket, that doesn’t always mean your car insurance will go up, especially if the ticket is for a minor violation with a good driving record. If you have accident forgiveness added to your policy, you may not even experience an increase after a minor at-fault accident. By the way, adding accident forgiveness may be worth the expense if you have teen drivers.
Myth #15: If you don’t report an accident, you can keep your rates from rising.
Fact: If you’re at fault in an accident with another driver, that driver may file a claim for injuries and/or damages. If that happens, it’s only a matter of time before the other driver’s insurance carrier files a claim against you and your carrier. Also, if you’re issued a ticket because of the crash, the ticket might show up on your driving record. Now you’ve got two reasons for an increase in premium.
Myth #16: Men pay more for auto insurance than women.
Fact: Gender is a rate factor for auto insurance premiums, but it’s not the only factor. Several other factors are considered, including your ZIP code, age, driving record, credit score and car make/model. Young men ages 16 to 24 pay about $500 more per year than women of the same age, but this gap shrinks as drivers get older. Some studies show that older men may pay less than their female peers.
Myth #17: You only need the minimum amount of auto liability insurance required by law.
Fact: The state of Oklahoma requires drivers to carry a minimum of $25,000 per person and $50,000 per accident ($25,000/$50,000 or 25/50) bodily injury liability and $25,000 property damage liability coverage. Unfortunately, this level of coverage may only cover minor accidents and fender benders. If you’re in a major accident, you’ll likely be responsible for paying much more than that out of pocket.
The insurance industry and consumer groups generally recommend a minimum of $100,000 per person and $300,000 per accident ($100,000/$300,000 or 100/300) bodily injury liability. Also consider a personal umbrella insurance policy if you have substantial assets to protect from a lawsuit or a teen driver.
Myth #18: Thieves don’t steal old cars, so you don’t need comprehensive coverage on your old car.
Fact: Unfortunately, many criminals are still attracted to older, trustworthy, popular vehicles because they’re easy to steal and there’s a large demand for their parts. Comprehensive coverage helps cover expenses caused by theft, vandalism, fire, flood, hail or other non-collision losses.
Myth #19: Your insurance company will pay your loan if your car is totaled.
Fact: As discussed in Myth #11, auto insurance pays the fair market value for vehicles, which is “Actual Cash Value” (ACV). In general, this is the original cost of the vehicle, minus depreciation. If your car loan is more than the fair market value paid for your vehicle, you’re still responsible to pay the difference to your lender. However, gap insurance can help pay the difference between the fair market value of the vehicle and the loan balance.
For example, suppose you bought your car for $30,000 and you still owe $28,000, but your car was totaled when it was worth $25,000. You would be paid the fair market value of $25,000 and you would still owe $3,000 to pay off your loan. Gap insurance could help pay that remaining $3,000.
Myth #20: Your own car insurance covers you the entire time you’re driving for a ride share service.
Fact: If you drive for a rideshare network like Uber® or Lyft®, your standard auto insurance policy may not cover you during Period 1, which is while you’re logged in and active on the rideshare network and waiting for a fare; or during Period 2, after you accept a fare and on your way to pick up your passenger. It definitely doesn’t cover you during Period 3, which is while your passenger is in your vehicle.
Your rideshare company offers coverage, but you need to review when the coverage starts and ends and how much coverage you have during each period. The rideshare company might be providing less coverage than what you have on your personal auto insurance policy. Contact your insurance agent to discuss coverage options so you can be covered properly.
Myth #21: If another person drives your car, in the event of accident, his or her auto insurance will cover the damages.
Fact: In Oklahoma, the auto insurance policy covering the vehicle is considered the primary insurance. This means that the car owner’s insurance company must pay for damages caused by an accident, regardless of who is driving. If you give permission to someone that isn’t listed as a driver on your policy to drive your car and they get in an accident, your car insurance is the primary policy. If that person also has an auto policy, their policy may act as a secondary policy if the accident expenses exceed the limits of your policy.
Myth #22: The laptop/personal items in your car are covered by your auto insurance policy.
Fact: Your auto insurance doesn’t cover your personal property inside your vehicle. Your personal property, such as your cell phone, laptop or other personal items you have inside your car are typically covered by the personal property coverage in a homeowners or renters insurance policy.
Myth #23: Staying with one carrier for many years will get you the best rate.
Fact: Although some carriers give discounts for loyalty, staying with one carrier for a long time doesn’t guarantee you the best rate. Carriers consider how long you’ve been with the same carrier when determining your rate, so it does matter to some degree. However, the best way to get the best rate is to shop your insurance every year, 3-4 weeks before the policy expiration date. Using an independent insurance agency will help give you access to multiple insurance carriers so you can keep your agent, but have diversity in carriers.
Myth #24: Small cars are cheaper to insure.
Fact: Small cars aren’t always cheaper to insure. There are many other factors that are considered when calculating the rate for a vehicle. As mentioned in myth #1, insurers consider other information about the vehicle, such as car make, model, body type, engine size, the age of the vehicle, sticker price, the cost to repair it, its overall safety record and the likelihood of theft.
Myth #25: Soldiers pay more for insurance than civilians.
Fact: Soldiers don’t always pay more for insurance than civilians. Many insurance carriers give a discount for soldiers and their families, regardless of which branch. You may need to supply documentation for verification.
Myth #26: Car insurance rates always decrease when you turn 25.
Fact: There’s no rule that says auto insurance rates decrease at the age of 25. Although age is a factor that affects car insurance rates, your rate doesn’t automatically decrease on your 25th birthday. Each carrier has their own standard, but in general car insurance rates tend to decrease around the age of 25. Other factors are also considered, such as credit score, driving record and claims record.
Myth #27: You only need to worry about car insurance for you and your household.
Fact: You need to know how many people driving around you don’t have car insurance! In Oklahoma, about 25% (1/4) of the drivers on the road are either uninsured or underinsured. This is a big problem! This means that if you’re hit by an uninsured driver or involved in a hit and run, you may be stuck paying medical bills and car repairs after the accident. Uninsured/underinsured motorist (UM/UIM) coverage can help cover medical expenses for you and your passengers if you’re hit by someone that doesn’t have auto liability insurance or enough to cover your bills.
Myth #28: Sports cars are more expensive to insure than family.
Fact: Sports cars aren’t always more expensive than family cars. Several other factors are considered when determining the price of insurance, such as the likelihood it will be stolen, its repair costs and how well it protects everyone in the car from injury in a collision.
Myth #29: Personal auto insurance also covers business use of your car.
Fact: Personal auto insurance isn’t designed to cover you if you’re using your vehicle for business purposes. If you’re self-employed, it’s important to purchase business auto insurance. If you have other people, such as employees, using your vehicle, regularly check their driving records.
Myth #30: You can’t cancel your auto policy mid-term.
Fact: Most insurance carriers will allow you to cancel a personal auto policy mid-term, but it’s important to have another policy lined up to start when the other one is cancelled so there is no lapse in coverage. When you cancel an auto policy mid-term, you should receive any unused premium that you’ve paid. Since an auto policy is a contract, some carriers may charge you a fee to cancel mid-term. Review your policy to understand your options.
Myth #31: A short lapse in car insurance coverage doesn’t matter.
Fact: Even a short lapse in car insurance coverage can dramatically affect your personal auto insurance rates! Many insurance carriers offer a grace period, but if your lapse extends beyond the grace period, your rates could go up. The reason for the lapse is considered. If you have a health issue, overseas deployment or other legitimate reason for not maintaining coverage, it may not affect your rate as much as if you simply stop paying your premium and continue driving. Before you cancel your coverage, speak with your insurance agent to learn about your options.
Myth #32: All car insurance companies are the same.
Fact: Most insurance carriers tend to offer similar coverage, but there are differences that set each carrier apart. Each carrier has its own rating system, “appetite” for risk, coverage packages and discounts that affect their rates. It’s important to use an independent agency so you can receive personalized advice when choosing an auto policy that fits your needs.
Myth #33: A not at fault accident won’t affect my rates.
Fact: It really depends on the insurance carrier that you’re using, but in general, being involved in an auto accident that isn’t your fault doesn’t cause your insurance to rise. The at-fault driver’s insurance should pay your expenses for medical bills and vehicle repair associated with the accident. However, if you have a pattern of being involved in multiple accidents, regardless of who’s at fault, it’s very likely that your rates will go up.
Myth #34: Your driving record is the only factor insurance companies consider.
Fact: Your driving record is a huge factor, but it’s only one of many factors that determine your insurance rate. Other factors considered are your age, claims history, credit score, vehicle information, other drivers on your policy, ZIP code, if you own or rent and if you’re bundling multiple policies. Time also plays a factor, such as how long you’ve been insured, at your address, at your job and owned your vehicle.
Myth #38: People don’t need car insurance if they don’t live in the city.
Fact: The state of Oklahoma requires every car driving on public roads to be insured. It doesn’t matter if you live in a rural area or in a city. Drivers in rural areas are also at risk of accidents, including non-collision risks like hail, tornado and flood or hitting an animal.
Myth #36: Your health issues affect my auto insurance.
Fact: Insurance carriers don’t ask questions about your health when you get a quote for auto insurance. Your health shouldn’t affect your auto insurance rate unless it directly affects and influences your ability to drive. Older drivers typically have more health issues, but many times they have lower rates because they drive less. Some insurance carriers offer special discounts for older drivers.
Myth #37: Accidents and tickets affect your rate forever.
Fact: Insurance carriers typically only look at the past five years of your driving record and claims history. Some might go back as far as six years, but it really depends on the carrier. If you keep your record clean, your accidents or tickets will eventually fall off the radar after a period of time. Some carriers offer accident forgiveness, so that can help keep your rates affordable if you don’t show a pattern of risky behavior.
Don’t let common auto insurance myths steer you in the wrong direction! Do your research and learn about the coverages you need and how your insurance policy can protect you, your family and your property!
How can you buy car insurance in Oklahoma?
There are two easy ways to get a quote or request more information for auto insurance in Oklahoma:
- Call/Text (405) 605-9891
- Email jp@schererinsurance.com