Many drivers would consider auto insurance a necessary evil in today's world-that is if they want to drive a vehicle in the United States. And most, if not all drivers, are continuously looking at for ways to save money on the policy premiums they pay. Many people would probably agree that the number of auto accidents or drunk-driving citations drivers receive are factors that increase insurance rates, but may not be able to agree on the other factors that play a part in determining the price of car insurance.
The Insurance Information Institute has listed eight popular factors many people believe drive up the cost of auto premiums but actually do not.
- Vehicle color increases premiums: The color of the vehicle people drive has no bearing on the price of the premium, according to the Institute. Some individuals believe that red cars are higher to insure because of the suspected correlation between aggressive driving. But, there is a lack of evidence supporting this assertion. Conversely, the type of vehicle a person drives does play a factor. Make, model, body type, engine size and age of the vehicle are specific indicators that determine insurance premiums.
- Drivers' age increase premiums: Actually, as individuals get older they will most likely pay less for their auto insurance. Some insurance providers give a 10 percent discount to seniors. Others offer a premium reduction if an older driver completes an accident prevention course.
- Drivers' bad credit scores do not increase premiums: This is simply not true. Many would guess that people's finances have no relation to people's risk of getting into an auto accident. But, according to insurance companies, it does. Carriers will take into consideration a driver's credit score when determining the insurance premium.
- Insurance covers Acts of God or stolen vehicles: Unless a driver has elected to add comprehensive and collision coverage to their policy, theft, hail or flood damage, for example, is not covered. Encounters with wildlife like deer are also not usually covered unless a policy holder has purchased additional coverage.
- Drivers are covered as long as they purchase the required minimum liability coverage: All states require drivers to purchase a minimum amount of liability coverage. But in many cases-particularly because of the cost of healthcare in the U.S.-accident costs will probably surpass this amount. If the cost of the auto accident exceeds the minimum coverage of the policy, the driver is responsible for paying the excess.
- Individuals driving another person car are covered by their own personal policy: In many cases, the auto insurance policy tagged to the vehicle will cover drivers even if they do not own the vehicle. (However, if coverage is not available to drivers through the vehicle owner's insurance, then drivers can look to their own auto insurance for coverage.)
- Solders pay more for premiums than civilians: Actually, military personnel will, in many cases, receive a discount on auto insurance premiums. A member of the armed forces will simply need to provide proof of name, rank and service time. Some carriers even extend this discount to veterans.
- Auto insurance covers business use: If a driver's personal vehicle is used for business purposes, the auto policy will most likely not cover the accident. In Texas, insurance policies specifically exclude accident coverage if a driver's personal vehicle is used primarily for commercial purposes.
