Three Common Myths About Car Insurance
In most areas cars are the most commonly used method of travel and for that reason auto insurance is an important part of everyday life. May states even require drivers to have automobile insurance and if they drive without it they are breaking the law. For example, in Alabama car insurance is required by law. There are some common misconceptions about automobile insurance though. I will do my best to sort them out.
Myth number one: Age is not a factor when companies determine insurance premiums.
That is absolutely not true. Insurers base rates on how risky they perceive a driver to be. Most insurance companies determine that people under twenty-five years of age are a higher risk. People in this age group commonly pay higher premiums than people in age groups that are considered lower risk. Young people can often pay lower premiums if they are able to join a family policy with a parent. Without something like this young people normally pay much higher premiums.
Myth number two: One small accident will not affect my premiums.
It is true that many companies will not raise premiums if the accident was not your fault, but some companies will raise the premium regardless of fault. If the accident was your fault it does not matter if it was a big accident or a small one, it will more than likely affect your premium. In general, accidents will negatively impact the rates you pay for insurance. Also, the more accidents you have, the more of a risk you will appear to the insurance company.
Myth number three: My credit has nothing to do with my auto insurance premiums.
This is not true either. Insurance companies ask for your social security number because they run a credit report. They do not use the scores as lender, but they do take certain factors into consideration. Insurance companies also take it into consideration if you have had gaps in insurance coverage before apply for the new policy. Keeping car insurance up to date and avoiding gaps in coverage will help you to avoid penalties when starting a new policy.
There are many factors that insurers take into consideration when determining the premium you will pay. Accidents will have an impact, age will have an impact, and credit history can also have an impact. If you live in a state like Alabama car insurance is required by law so it is important to keep these facts in mind.
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