Don't Believe The Hype: Popular Misconceptions About Auto Insurance

Today's vehicle owners need to ensure that they get the facts about auto insurance. There are a lot of misconceptions about it that are usually passed from person to person by word of mouth. Some of these misconceptions have been circling around the "rumor mill" for many years. It is time to set the records straight. When in doubt, ask an auto insurance agent to get the correct information. The following points represent a few unfactual things some individuals believe about auto insurance. Drivers who have concerns about this scenario can purchase 

Insurance Pays the Remaining Balance Left on Auto Loans for Totalled Vehicles

The best way for drivers to determine what an insurance company will pay if their vehicles get totaled is to speak with an auto insurance agent. Companies have different payout structures. Some companies pay the market value of the vehicle, which may be more or less than what it is owed. Other companies offer a percentage of the value of the vehicle. This means that individuals who owe more on a vehicle than its market value will have to pay the remainder of the loan out-of-pocket. Drivers who have concerns about getting put in this position can purchase an add-on insurance product referred to as Guaranteed Auto Protection (GAP) Insurance.

Reporting Accidents Raises Insurance Rates

If an individual gets involved in an accident and is not deemed to be at fault, their rates should not go up. Some insurance companies have programs that offer accident forgiveness to drivers who have a good driving record. If it is discovered that a driver concealed an accident from their auto insurance provider, the company may suspend, revoke, or refuse to renew the policy. Depending on the circumstances, there might also be legal ramifications for making this decision.

Red Cars Have Higher Premiums

There are a variety of factors that affect insurance rates. The color of the vehicle that a driver chooses to purchase will not affect their rates. However, the make, model, and other factors such as the policyholder's driving record will affect rates. 

An auto insurance agent is a good resource to use to learn more about insurance. There are some things about policies that are governed by individual state laws such as determining fault in a car accident. and who pays. This can be complex for individuals who get involved in accidents in a state other than their home state. Agents can guide policyholders through claims processes by answering questions.

Contact an auto insurance agent in your area to learn more.