Car insurance is one of those topics that feels straightforward until you’re actually dealing with it. With countless advertisements and advice from friends, family, and even strangers online, it’s easy to fall for misleading information. Unfortunately, many drivers end up paying more than necessary or leaving themselves underinsured simply because they believe something that isn’t true. These widespread myths can create confusion and even lead to serious financial consequences. In this article, we’ll debunk six of the most common myths about car insurance, separating fact from fiction to help you make informed choices behind the wheel.
One of the most persistent myths is that red cars cost more to insure. This idea has been around for decades, possibly because red vehicles are more noticeable and are believed to attract more attention from both drivers and police. However, insurance companies don’t consider the color of your car when calculating your premium. Instead, they focus on factors like the make, model, age of the vehicle, safety features, your driving history, how much you drive, and where you live. So, go ahead and pick your dream car in cherry red—your insurance rate won’t flinch because of it.
Another common misconception is that your insurance automatically covers any damage, no matter what. Many people are surprised to learn that not all coverage types protect you in every situation. For example, basic liability insurance only covers damages you cause to others—it won’t pay for your own repairs or injuries. Comprehensive and collision coverage offer broader protection, but they come at an extra cost. Understanding the differences between types of coverage can prevent headaches and unexpected bills after an accident. Always read your policy details carefully and talk to your provider to ensure you’re covered for the scenarios that matter most.
Many drivers believe that older cars don’t need insurance, especially if they’ve already been paid off. While it’s true that you might not need comprehensive or collision coverage on a very old vehicle, most states legally require at least minimum liability coverage for any car you drive. Skipping insurance altogether isn’t just risky—it’s illegal. Even if your car isn’t worth much, being involved in a crash without coverage could mean paying thousands out of pocket for damages and medical bills. It’s always smart to balance the cost of coverage with the actual risk you’re facing.
Some people think that their car insurance will cover them no matter who is driving their vehicle. But policies typically follow the car, not the person. This means if you loan your car to a friend and they cause an accident, your insurance could still be on the hook for the damages. In some cases, the driver’s insurance might kick in, but your own policy is usually primary. It’s essential to know who is covered under your plan and to be cautious about who you allow behind the wheel. Trust is good—clarity is better.
It’s also a myth that your credit score doesn’t affect your car insurance rates. In many states, insurers legally use credit-based insurance scores as a factor when setting premiums. Studies have shown that people with higher credit scores tend to file fewer claims, so insurers often charge lower rates to those with good credit. This may seem unfair, but it’s a reality in much of the U.S. If your credit isn’t great, improving it can help reduce your car insurance costs over time—yet another reason to keep those credit card balances in check.
Then there’s the belief that insurance always covers stolen personal items from your car. Unfortunately, that’s not the case. If someone breaks into your vehicle and steals a laptop or bag, your auto insurance likely won’t cover the loss. Those items are typically only protected under a renters or homeowners insurance policy. Even if your car is broken into, your auto coverage may only apply to damage to the vehicle itself, not the contents inside. That’s why it’s best to avoid leaving valuables in your car or at least ensure they’re not visible from the outside.
Many drivers think filing a claim will always raise their insurance rates. While it’s true that some claims can lead to increased premiums, it’s not a universal rule. Rate hikes depend on several factors: the type of claim, your driving history, who was at fault, and your insurer’s specific policies. For example, if you’ve gone years without any claims, your provider might forgive one minor incident. On the other hand, repeated claims or a major at-fault accident could definitely cost you. It’s always wise to speak with your agent before filing, especially for small damages that might cost less than your deductible.
There’s also confusion around coverage for rideshare drivers. Some believe their personal policy covers them while driving for Uber or Lyft, but that’s not always true. Most personal auto insurance policies exclude commercial use, including ridesharing. If you’re using your car for work, you’ll likely need a rideshare endorsement or a separate commercial policy to stay protected. Without it, you could be left fully liable in the event of an accident. It’s important to be honest with your insurer about how you use your car—it could save you from huge problems down the road.
A final myth worth busting is the idea that your insurance rate