Car Insurance Quotes Separate Fact from Fiction

DEBATE

FACT OR FICTION?

When a driver gets his first speeding ticket, his car quotes go up automatically.

Fiction. In most cases, car insurers don't raise quotes—or rates—until a driver has multiple violations.

Red cars cost more to insure than cars of other colors.

Fiction. Color is not a factor used to calculate car quotes.

Anyone who drives a car with the owner's permission is covered under the car's policy.

Fact. Since a car policy follows the car instead of the driver, anyone who drives the vehicle with permission is also covered in case of accident.

Cheaper cars garner lower quotes.

Fiction. If the car has a large or high-performance engine, weighs more than average or is a special-edition model, car quotes will naturally run higher.

Urban dwellers' insurance rates are higher than for those living in the suburbs or the country.

Fact. City dwellers face more traffic, more people and a greater likelihood of car theft.

Credit rating helps determine car quotes.

Fact. Researchers have discovered a close correlation between credit and risk. Because of this, higher credit scores usually accompany reduced risk (and lower quotes), and lower scores are linked to additional risk (and higher quotes).

Insurers can charge whatever they want.

Fiction. Each state requires insurers to state how it calculates rates. Regulators then review this information and ensure guidelines are adhered to.

The bare minimum in car insurance is usually adequate.

Fiction. If a driver causes an accident that results in a lawsuit—and the car isn't insured adequately—assets could be seized to cover the remaining damages.

Insurers group drivers with others who share similar risk characteristics.

Fact. Insurance companies rate drivers based on data collected for other drivers with similar statistics. This is the most solid predictor of risk.

When a driver purchases a new vehicle, it's automatically covered under the existing car policy.

Fact—but only temporarily. While most insurance companies automatically cover an insured's new vehicle, the owner must let his insurer know of the coverage change during a specified period, as designated by the contract.

No-fault insurance means premiums and quotes won't go up if a driver causes an accident.

Fiction. No-fault simply means each driver's policy covers his own damages. However, that doesn't mean more expensive premiums and higher car insurance quotes won't result.