When shopping for car insurance, it’s important to have a good understanding of the factors that affect your coverage. While there are lots of variables that can impact what you’ll pay for your insurance, there are also plenty of myths and misconceptions out there that are worth being aware of. The best approach is to arm yourself with the facts before you start looking for car insurance. We’ve pulled together a list of the 5 most commonly believed car insurance myths:
Myth #1: Rental cars require additional insurance
A lot of rental agencies will try and tell you that it’s absolutely necessary to buy separate insurance for your rental car. However, the truth is that if you’ve already got existing auto insurance on a vehicle you own, rentals will also be covered. So, if you have full coverage on your personal car, then any rentals will be covered too (as long as they’re both used for personal reasons as opposed to for business).
Myth #2: Car colour affects the price of car insurance
Ever heard of "arrest-me-red" or "hide-in-plain-sight white"? The myth about car colour affecting the price is one of the oldest going around. Some insist that owning a red car will make you more prone to being caught speeding, thus making it likely you'll pay more for insurance coverage. However, this is nothing more than urban legend. While there are certain aspects about your car that’ll be important when determining how much you’ll pay, the colour of your car isn’t one of them. Your insurance rate will be based on things like make, model, engine size, body type, and age of the vehicle.
Myth #3: Compulsory third party insurance covers damage to my car
The reality is that compulsory third party insurance only covers events where there’s damage caused to another person by your car. In situations like this, the cost of the damage to your own car isn’t covered.
Across Australia, compulsory third party insurance is usually included in the cost of car registration each year and it’s illegal to drive without this type of insurance. While it’s not illegal to drive without comprehensive insurance, this type of insurance helps to minimise costs to you as a driver. Without it, damage to your car, damage to someone else or their property would need to come out of your pocket if you have an accident. Sometimes it’s better to be safe than sorry.
Myth #4: If someone else is driving your car, their insurance covers accidents
Car insurance doesn’t follow the driver – in most cases the insurance is attached to the vehicle. If your car is in an accident, regardless of who the driver is, then the insurance you have on the vehicle is what’s used to cover the costs. In some cases though, for instance if your insurance isn’t able to fully cover the costs of the damage, then the driver of the vehicle becomes next in line to cover the costs. It’s best to check with your insurer what the coverage is for someone else driving your car if it’s a scenario that applies to you.
Myth #5: Personal property inside my car is covered by my car insurance
If your car is broken into, damaged or stolen, not all items within your car are necessarily covered. Not all insurance policies are created equally, so it’s worth finding out of yours covers you for stolen property when taking out your policy.