Car insurance is filled with myths and misconceptions that could cost you money or leave you underprotected. With confusing terminology and complex coverage options, it's easy to believe inaccurate information.
Understanding the truth about these common myths can help you make smarter decisions about your coverage and potentially save hundreds on your premiums.
» Looking to switch insurers? Compare our best car insurance providers.
Key Takeaways
The color of your car doesn't impact your insurance rates—insurers focus on the make, model, and your driving history.
State minimum coverage requirements are often insufficient to protect you in an accident.
Your credit score does affect your insurance rates in most states—maintaining good credit can help lower your premiums.
Personal belongings stolen from your car aren't typically covered by auto insurance—that's what homeowners or renters insurance is for.
1. Red Cars Cost More to Insure
One of the most persistent myths is that driving a red car will increase your insurance premium. This isn't true. The color of your vehicle has absolutely no impact on your insurance rates. Insurance companies consider the make, model, year, engine size, and driving history.
This myth likely originated from the misconception that red cars attract more attention from law enforcement, leading to more speeding tickets. What really affects your rates is your driving record, the vehicle's safety ratings, repair costs, and the likelihood of theft.
Don't worry about insurance penalties if you're shopping for a new car and love that crimson finish. Choose the color you love.
2. Comprehensive Coverage Means Complete Protection
Don't be fooled by the name—comprehensive coverage doesn't protect you from everything. Despite its all-encompassing name, this insurance specifically covers damage to your vehicle from incidents other than collisions.
Comprehensive coverage protects against:
Theft or attempted theft
Vandalism or malicious mischief
Fire or explosion
Falling objects (like tree branches)
Natural disasters (floods, hurricanes, tornadoes)
Animal collisions (like hitting a deer)
Glass damage (windshield cracks or breaks)
You'll also need collision coverage if you want protection from collisions with other vehicles or objects. These coverages (often called "full coverage") provide much broader protection for your car.
» Looking for the right coverage? Check out our ultimate guide to car insurance in 2025.
3. You Should Shop for New Insurance Every Year
While comparing rates occasionally is smart, constantly switching providers might actually cost you money. Many insurance companies offer loyalty discounts after you've been with them for a specific period. You might also forfeit claim-free discounts by jumping between insurers too frequently.
Consider reviewing your options every 2-3 years rather than annually, and ask your current insurer about loyalty discounts before making a switch.
However, it's always a good idea to shop around when you experience major life changes such as moving, getting married, adding a teenage driver, buying a new vehicle, or seeing significant changes in your credit score. These events can substantially impact your rates.
4. State Minimum Coverage Is Enough
Meeting your state's minimum liability requirements keeps you legal, but rarely provides adequate protection. For example, some states require as little as $5,000 in property damage liability, which wouldn't cover bumper damage on many newer vehicles.
To understand why minimum coverage falls short, consider these real-world costs:
The average new car price exceeds $48,000
A three-day hospital stay averages over $30,000
Medical treatments for serious injuries can cost hundreds of thousands
Many states require minimum bodily injury liability of just $25,000 per person and $50,000 per accident—far below what a serious accident might cost.
Higher liability limits typically don't cost much more but provide significantly better protection. If you cause a car accident that exceeds your coverage limits, you're personally responsible for the remainder.
» Want to save on your premium? Check out these common car insurance mistakes to avoid.
5. Older Drivers Pay Higher Premiums
Contrary to popular belief, many senior drivers qualify for lower rates through special discounts. Organizations like the American Association of Retired Persons (AARP) offer defensive driving courses that can reduce premiums. Older drivers often drive fewer miles and have years of experience behind the wheel.
Age alone doesn't determine your premium—driving history and habits matter more. Many insurers offer specific discounts for mature drivers with clean records.
6. Credit Scores Don't Impact Car Insurance Rates
Contrary to popular belief, most insurers consider your credit history when setting car insurance rates. They use credit-based insurance scores to help predict claim likelihood.
Research shows that credit habits correlate with insurance claim patterns. People with stronger credit typically file fewer and less costly claims, often receiving better rates. While controversial, this practice remains legal in most states, though a few (California, Hawaii, Massachusetts, and Michigan) have limited or prohibited it.
If you want to reduce your insurance costs, improving your credit score could help lower your premiums at renewal time—another benefit of maintaining healthy finances.
7. Your Insurance Covers Anyone Who Drives Your Car
While your policy typically follows your car rather than the driver, some limitations exist. If someone regularly borrows your vehicle, they may need to be listed on your policy. Additionally, if they cause an accident in your car, your insurance is primarily responsible, which could increase your future rates.
Before lending your keys, check your policy's specific terms about permissive drivers and make sure anyone who regularly drives your car is correctly listed on it.
» Find out what you need to do after a car accident.
8. Personal Items in Your Car Are Covered
One common myth is that if your laptop, smartphone, or other valuables are stolen from your vehicle, your auto insurance will cover them. This isn't true. Standard auto policies generally don't cover personal property.
Your homeowners or renters' insurance typically covers these belongings when stolen from your car, though with different deductibles or limits than home theft. Expensive items like jewelry may require additional scheduled coverage.
For protection, always take valuables with you or keep them out of sight when parking.
Conclusion
Understanding these insurance myths helps you make better decisions about your coverage. The right policy for you depends on factors like your vehicle, driving habits, financial situation, and risk tolerance.
Taking time to understand your options beyond the myths can save you money and provide peace of mind on the road. When shopping for car insurance, compare quotes from multiple providers and ask about discounts you might qualify for.
» Ready to save? Check out these strategies to lower your car insurance rate.
