Dispelling Car Insurance Myths
As with any financial product, there are a number of myths that have popped up around car insurance. The tedious and arcane terms that come with car insurance cover usually adds to the confusion more than it acts to dispel it. Therefore, we’ve put together this guide to help drivers sort fact from fiction when it comes to the most popular car insurance myths.
Fully Comp Cover Myths
Many of the myths that surround car insurance have to deal with fully comp cover. This makes sense, as the name itself implies that there is no aspect of motoring that isn’t covered by your car insurance policy.
One of the most common myths is that drivers who have fully comp cover are able to drive any car and have their cover apply. This quality is known as Driving-Other-Cars provisions, or DOC. There are some policies that include DOC, but not every fully comp cover includes it. This is especially true for motorists under 25, and can be influenced by other factors as well, like occupation.
Another myth that is related is the notion that a curtesy car is always covered. However curtesy car cover can be restricted depending on a number of factors, including why your car is being repaired, what mechanic is doing the repairs and offering the curtesy car, and how the car is damaged. For example, if your car is stolen, then it is unlikely your insurance includes a provision for a curtesy car.
A final myth regarding fully comp coverage is that any accident you cause will be covered. While this may be the case with many fully comp policies, there are situations that can cause an insurance company to deny a claim. One such situation could be drink-driving, or other criminal or negligent actions. Many covers have clauses that explicitly release the insurance company from its obligations in these circumstances.
The other large category of car insurance myths has to deal with different rumors and legends regarding the price of insurance, as well as ways to manipulate it.
One of the most common financial myths for car insurance is that a driver’s premiums will drop when you turn 25. After all, car insurance prices are set by statistics, and individuals older than 25 are far less likely to be in accidents than those under the golden age. However, this is simply one factor in insurance pricing. Many drivers will see the price of insurance drop when they reach 25, but others may see it stay the same, or even increase. This is because other factors, like driving history, points, convictions, and bans can have a greater effect on your insurance cost. Other factors that could raise your prices after you reach 25 years include a change in occupation, a different car, a new residence, and more.
Another myth is that third-party cover is always cheaper than fully comp cover. While this makes logical sense, many car insurance firms have begun to raise the rates for third-party cover, as that category of insurance tends to have many more claims filed against it. As a result, fully comp cover may be less expensive for some drivers.
Many drivers have also heard, and may even have repeated, the myth that no-fault claims will not cause your insurance rates to increase. This is nothing short of wishful thinking, however, as statistics show that a no-fault claim makes it more likely that a driver will experience a fault claim, and so the price of cover can go up.
Statistics play a role in dispelling another common car insurance myth. Many drivers claim that garaging a car means insurance premiums will be cheaper. While this may usually be the case it isn’t always. Insurance prices are based on statistics, and if drivers in your area are statistically more likely to cause damage to their car in the garage, than premium rates for garaged cars will be higher.
Finally, many drivers also think that their renewal price will be better than a new customer price. This may be the case sometimes, but not always. It is always worth it to do some comparison shopping when your renewal time is coming up to ensure you get the best deal.
As you can see, many of the things that you thought you knew about car insurance may be false. Be sure to check some of our other expert guides before buying your next motor cover.