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Survey Exposes Common Car Insurance Misconceptions

Owning and operating a car can be expensive enough without wasting money because you don’t understand your auto insurance policy. But many car owners likely are doing just that judging from a survey of 1,000 adults conducted in August by price-comparison website insuranceQuotes.com. The study determined that misconceptions abound when it comes to car coverage, how it works and what it pays for.

Related: Common Myths Among Young Drivers

“Lacking information about auto insurance can cost consumers — either when they pay for coverage they don’t need, fail to get the right coverage or don’t know to file a claim for an incident that’s covered,” the site stated.

Among the most popular falsehoods widely believed to be true are:

  • Red cars are more costly to insure
  • Auto insurance doesn’t cover you if you cause a crash
  • You’re only paid the value of scrap metal when your vehicle is totaled
  • Your car insurance carrier pays for mechanical repairs
  • Your auto coverage includes items stolen from your car

Despite 44 percent of survey respondents believing that a red car is a red flag for an inflated premium, researchers insist that it just isn’t so. Likely a product of the popularity of the color red among sports-car buyers, this myth is particularly prevalent among 18- to 29-year-olds. But in reality, the 46 percent of drivers who said they believe car color has no effect on the cost of auto insurance were correct, insuranceQuotes.com stated.

Meanwhile, 37 percent of those surveyed – including more than half of 18- to 29-year-olds — falsely believed that car insurance does not pay off if you cause a crash. “Liability insurance, required for driving in nearly every state, covers damage you cause to someone else’s car or other property as well as medical costs for injuries when you’re at fault in an accident,” researchers stated. “Collision insurance, which is optional, covers damage to your own car, even if the accident was your fault.”

And while auto insurance pays whatever the market value of your car was before a crash, 28 percent mistakenly believe insurers will pay only the post-crash value of the mangled metal. That’s despite the fact that some policies now even cover the cost of what it is to replace your car new versus the depreciated value at the time of the crash.

As for the other persistent fallacies, 34 percent (47 percent of those age 65 or older) think auto insurance covers personal belongings swiped by a thief from their car, when in fact that loss is covered by their homeowner’s or renter’s policy. And 14 percent (nearly a quarter of younger drivers and people who earn less than $30,000 a year) are under the impression that car insurance covers mechanical breakdowns, which it does not.

Researchers urge motorists to clear up potentially costly misconceptions by consulting a knowledgeable professional, reading the policy’s fine print, and anticipating common problems and whether they’re covered before they actually occur.