Nine Myths about Auto Insurance that can hurt you

Services for Real Estate Pros Insurance NPN # 13379201

Responsible auto insurance policy owners must understand the truth on auto insurance. This will dispel nine common myths about auto insurance and how to protect you from these myths.

1. If my car is totaled, my loan will be paid by my insurance.
Again, the insurance company will only pay the Actual Cash Value of your car at the time before the accident. If you owe a substantial amount on your car before an accident, chances are you will end up paying on a loan for a car that is no longer drivable.

2. Full coverage can cover all accidents in full.
There is not a policy that covers all accidents in full. Auto policies have limits of what they will pay for damages caused to other cars. Also, if you total your car, you will only receive the Actual Cash Value of your car before the accident. It does not cover what it would cost to replace your vehicle.

3. Insurance companies have higher rates for red cars.
Insurance companies don’t increase your rates for the color of your car. They increase your rates because of speeding tickets. The myth originated from people believing those with red cars are more likely to receive speeding tickets.

4. My policy covers anyone over 25 driving my car.
This depends on your policy. Generally, auto policies only cover those listed on the policy and for occasional drivers that have permission to drive the automobile.

5. Auto insurance purchased after an accident will cover that accident.
Insurance is designed to cover unforeseen accidents and will not just pay for previous accidents for you. This philosophy compares to getting a lottery ticket after the numbers were announced and expecting to win.

6. If my friend borrows my car, his or her insurance will cover anything that may happen to my car.
This depends entirely on the state you live in. In some states, the friend who damages your car must reimburse the insurance company if the vehicle is damaged due to their negligence.

7. If personal property in my car is stolen, my car insurance will cover it.
Your auto insurance only covers your car and not any property inside of it.

8. To cover myself in any car I drive, I have to purchase non-owners insurance.
Auto insurance is meant to cover anything that you do in a car. The car isn’t going to be in court if a lawsuit is filed from a car accident. It will be you. Therefore, the auto policy generally will provide coverage for the policy holder when they are driving other people’s cars.

9. If I don’t list my teen on my policy, I won’t be held liable if they get in an accident.
Parents will always be responsible for their children. Auto insurance policy for your teen drivers doesn’t make you liable (because you already are), but gives you an option for paying for that liability that won’t break the bank.

Being an informed auto insurance consumer will help you provide necessary coverage for your needs.

We can go through any concerns you may have about how protected you are and look into better options for you and your family.

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Comments (18)

Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

I learned the hard way about losing good s stored in your car....Also, I saved money by not buying temporary insurance when renting a car because my current insurance covers anything I drive...good post and subject thank you

Feb 28, 2013 09:51 PM
Al Raymondi
Ocean View Realty Group in Ormond By The Sea Florida - Ormond Beach, FL
Ormond By The Sea Florida - Home and Condo Sales

Nice post Frank, most folks have no idea what their auto policy covers and they don't find out until their claim is denied.

Feb 28, 2013 10:22 PM
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

Wow, that is a lot of serious information. I consider myself pretty savvy about insurance and can tell you are items on your list I was not aware of. Again, an outstanding post. Suggested.

Feb 28, 2013 10:40 PM
Frank Laisch
Orlando, FL
"The Insurance Guy"

Richie, Many people do have the rental coverage so they many not need it for renting cars. the extra savings is good

David, in the Auto Insurance world, Credit palys a big part in determining premium. thanks for sharing the link

Al. you are so right, most only know they have coverage and not what they are covered for.

Joe, Thanks for the suggestion. we try hard to educate our clients on coverages. the last thing we want if for them to need something and not have the coverage for it


Feb 28, 2013 10:47 PM
Toni Weidman
Sailwinds Realty - Trinity, FL
20+ Years Selling Homes in New Port Richey, FL

This makes me feel so much better about shopping for that red car, Frank. Good information here. suggested.

Feb 28, 2013 11:09 PM
Frank Laisch
Orlando, FL
"The Insurance Guy"

Thanks Toni, go & get that red car, how about a convertible to enjoy the Florida sunshine

Mar 01, 2013 01:27 AM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Frank, great list, and it is amazing how many people do think that the insurance company is going to completely payoff the car loan.  The ones that I love though are #3 and #5, still laughing at them.

Mar 01, 2013 04:39 AM
David Cole
David Cole CPA - Orlando, FL
David Cole CPA
Frank, these are some excellent tips on auto insurance. Didn't know a few of these
Mar 01, 2013 07:52 AM
Debbie Reynolds, C21 Platinum Properties
Platinum Properties- (931)771-9070 - Clarksville, TN
The Dedicated Clarksville TN Realtor-(931)320-6730

Frank, Great list. Now I knew most of them but the red car one is that the police watch red cares more, right? LOL

Mar 01, 2013 12:34 PM
Diana Zaccaro
Tropical Beachside brokered by eXp - Cocoa Beach, FL
"The Accidental Blogger" Cocoa Beach, Florida

Frank, Good info and I bet there are a lot of parents who wish #9 was true...


Mar 01, 2013 01:05 PM
Frank Laisch
Orlando, FL
"The Insurance Guy"

George, those are both good myths that i hear all too often

David, Thanks for stopping by

Debbie, only if that red car is speeding LOL

Diana, Yes, if that were only true. :-)

Mar 01, 2013 08:00 PM
Dorie Dillard Austin TX
Coldwell Banker Realty ~ 512.750.6899 - Austin, TX
NW Austin ~ Canyon Creek and Spicewood/Balcones

Good morning Frank,

This is an excellent list..thanks for providing this..I'm with Diana..I'm sure all parents wish #9 was true!!!

Mar 01, 2013 08:54 PM
Captain Wayne - Rowlett Real Estate School
Rowlett Real Estate School - Panama City, FL
Rowlett Real Estate School / Owner and Instructor

Hi Frank, great post!  Thank you so much for the information.

Mar 01, 2013 08:56 PM
Silvia Dukes PA, Broker Associate, CRS, CIPS, SRES
Tropic Shores Realty - Ich spreche Deutsch! - Spring Hill, FL
Florida Waterfront and Country Club Living
Frank, great points! I drove red cars for over 15 years and never got stopped or got a ticket. Definitely a myth! Must have been the silver and grey car lobby who started it! :-)
Mar 01, 2013 08:58 PM
Amy Stockman
Lakeridge Land Suveying & Mapping, LLC - Winter Garden, FL
Lakeridge Surveying

Frank, I thought #3 was so true. We got my husband a red corvette in 2004. after all the tickets and insurance increases we sold the car and got a black Acura. insurance went down

Mar 01, 2013 09:07 PM
Frank Laisch
Orlando, FL
"The Insurance Guy"

Dorie, I am sure everyone wished #9 was true

Capt Wayne, Thanks for stopping by for a visit

Silvia, you are probably right

Amy, a Red corvette just sounds like a whole lot of tickets, probably a good choice to switch to an Acura

Mar 01, 2013 11:07 PM
Sabrina Schirmer
National Insurance Solutions, LLC - Winter Haven, FL

#3,4 & 9 are three that I hear a lot. you have to know whats covered and more importantly what is not covered in your insurance policy

Mar 05, 2013 07:16 PM