5 Car Insurance Myths

Buying car insurance can sometimes be akin to going to the dentist – painful but necessary. In the case of insurance, complicated and expensive.

No one really knows how premium costs are determined, and when you ask an agent, he usually “Hems and has,” or gives you long complicated explanations you can’t understand. That could very well be the reason why there are so many myths related to insurance coverage and pricing. The following are five common auto insurance misconceptions you should know about.





Misconception-1:The Color of the Car Influences the Price of Your Auto Insurance Policy

Many people believe that the color of a vehicle is the deciding factor in a car insurance premium. In fact, those that believe the myth say the more vibrant a color your car is, for example, red, the higher your insurance will be. In truth, the color of your car does not influence the cost of your insurance premium. However, your auto insurance premium is influenced by the make, model, body type, engine and vehicle age. When buying a new car some good questions to ask yourself are: is it popular with thieves? Is it expensive to repair? And does it have an excellent safety record? If you don’t know the answer to these questions, you should look them up as they will influence the cost of your insurance.

Misconception-2:The Older You Are the More You Pay for Insurance

It may be true that life insurance rates go up when you get older, but that doesn’t hold true for car insurance. To the contrary, drivers who are 55 or older can often get their rates reduced by as much as 10% – especially if they complete an accident prevention course.

Misconception-3: Your Car Insurance Policy Covers Any Damage to Your Car

This is a half-truth. It really depends on the type of insurance you have. If, for instance, you only have liability insurance, which only offers you coverage if you hurt the other driver or damage his/her property. This type of insurance doesn’t offer coverage for your vehicle if you are at fault. 

Comprehensive and collision insurance coverage, on the other hand, does offer you property protection and injury protection. However, this is only an optional coverage, unless your car loan or lease requires you to have it. Comprehensive insurance also offers you compensation for damage to your vehicle, including damage caused by something other than a collision with another vehicle. This might be damage as a result of fire, vandalism, weather, theft and other types of damage. Note: if your car is worth less than a couple of thousand dollars, this optional coverage may not be worth the price.

Misconception-4: Military Personnel Pay More for Car Insurance

This seems to be a very popular misconception, when, in fact, just the opposite is true. Military personnel, no matter what the branch, usually qualify for auto insurance discounts. Of course, you’ll have to document your military rank and the length of time of service.

In some cases, an insurance company will also offer former members of the military or a military family, discounts as well. So this is one question you should ask any car insurance provider.

Misconception-5: Your Policy Offers Coverage when You Drive the Car for Business
 
Your personal auto insurance coverage will not compensate you if you are self-employed and using your own car for business needs. For example, if you take on a pizza delivery job and use your own car, the company’s insurance policy does not cover you. Your personal insurance could also deny your claim. To compensate for this issue you should get business auto insurance, or refrain from using your personal vehicle for business needs.

Bottom Line

When it comes to car insurance, there are many influencing factors. The type of car you drive, your driving record, your age and even your credit score will influence the rate you get. However, none of the above misconceptions will affect your insurance rates either positively or negatively.

source: insurancequotesfast.com

Drivers ending car loan deals early

More than a half of all cars purchased under motor finance agreements had their registered keeper changed before the full term was up last year, according to new research.

Global information services company Experian found that 54 per cent of motorists swapped their cars before the conclusion of their finance deal, compared to 35 per cent in 2009 and 28 per cent in 2007.

Experian said drivers are changing their vehicles early because they are seeking to adjust their motoring finances, are tempted to buy a better car, or need to make a change because of their personal circumstances, such as starting a family and needing a bigger vehicle.



Most ownership changes happened just over a year before the end of finance deals last year, the study of 87,000 hire purchase (HP) and personal contract plan (PCP) arrangements in Britain revealed.

The research involved both new and used cars and the data shows those buying used cars are more likely to swap earlier than the overall average, around a year and a half before the scheduled end of finance deal terms, while those with new cars typically switched with seven months still to go.

The 2009 averages showed new cars remained in the possession of the original owners until five months after the term ended, and used car buyers changed just a month before. In 2007 buyers of both new and used cars typically swapped vehicles 13 months and seven months after the end of agreements respectively.

The study shows more than four in five drivers arranged car loans of 26 months or more on average in 2012, mostly hire purchase agreements, but an increasing number of the deals were personal contract plans (PCP), up from 6.12 per cent in 2007 to 13.69 per cent.

It all adds up to a big change in how car buyers are choosing to manage paying for vehicles, according to Andrew Ballard, principle consultant at Experian's automotive business. He said more PCP deals and longer terms indicate drivers want to keep initial payments and instalments as low as possible.

Mr Ballard said the fact motorists are choosing to make changes earlier than ever could be because they can no longer afford the finance or have been tempted by subsidised deals or incentives.

He said dealers would be wise to keep in close contact with their customers to find out their needs to be able to offer them deals more suited to their circumstances.

source: confused.com