Insurance Myths

By: Melissa Jordan
Here at BIG Agency we hear a lot of weird things related to insurance. While some things might be rooted in the history of insurance, we’re here to debunk some common insurance myths that are outdated or simply not the case.
1. If I buy a red car, my insurance will be higher!
The price of the insurance on any given car has nothing to do with the color. Our system doesn’t even show us the color of any car on your policy. When you call us and say you “need to remove the black truck” we have no idea which truck is black! Instead of looking at color, insurance companies do take into consideration the year, make, model, type of engine, crash test ratings, your driving record, sometimes even your credit score! So, if red is your thing, go for it!
2. Can’t you just push a few buttons and make my rates go down?
It might work with the cable company, but it doesn’t work with insurance! We don’t (and can’t!) change rates based on a customer calling in and asking us to get them a special. We can only change rates based on changing your coverage, for example, raising or lowering a deductible, decreasing liability limits, or removing towing coverage. Rates are calculated by each company based on how they have filed with the state. Insurers can NOT deviate from these filed rates. Each state has regulators who review that information and the rates companies charge. If you do have a company that changes your rates by the click of a button, be sure to ask what changes they are making to the policy.
3. My cousin is paying X for his insurance and he has a bunch of tickets! Why am I paying more?
Each company calculates their rates differently and each person fits uniquely into each company’s rates. Companies calculate rates based on your age, driving record, the car you drive, if you’re single or married, where you live and so on. They also give discounts based on each person’s individual situation for example what you do for a living, what your highest level of education is, and if you have a good driving record. There are so many factors that go into the premium, it would be impossible to compare. You might fit in perfectly with one company that has great rates, while another is very high. This is why it’s important to have a good independent agent that can check your rates for you.
4. As long as I don’t tell my insurance company I’m an Uber Driver, they will still pay if I’m in an accident.
This isn’t the case, unfortunately. It’s written into several policies that if you are a delivery driver or an Uber driver, they will not pay for your claim even if it’s not related to delivering pizzas or while you’re driving for Uber. This is very important. You could be involved in an accident going to the store and still be denied coverage because you were breaking the terms of the contract. Please call our office and let us know if you are an Uber driver or pizza delivery driver. We want to make sure you’re insured.
5. I have rental car coverage on my policy, can I use that while my car is getting maintenance done/while I’m on vacation?
No. Your rental coverage would apply only during a covered claim. If you were involved in an accident, had hail damage, or hit a deer, you would be able to get a rental car. However, if you were getting routine maintenance (like an oil change) or taking a personal trip, there would not be coverage for that.
6. Will my price go down if I buy a newer car?
Usually, no. A newer car is more expensive, the parts would cost more to fix, and therefore, it would cost more to insure. You would probably take out a loan and need to carry full coverage as a requirement, so you would need to take that into consideration as well if you currently do not carry Comprehensive and Collision.
7. The tax value of my house is only $75,000! The house next door just sold for $67,000! Why do I have my house insured for $150,000?
We use what is called Replacement Cost instead of Actual Cash Value for most of our Homeowners policies. This is calculated slightly differently by each insurance company based on how their individual policies work. Replacement cost of $150,000 means that your insurance policy would pay $150,000 to rebuild your house from the ground up if it was a total loss. Even though the house may sell on the market for $60-80,000, if it was a total loss due to a fire, it could possibly cost upwards of $100,000 to rebuild it from scratch.
8. I heard if you have more insurance, someone will want to sue you for more money.
We hear this most often regarding Umbrella policies. In most cases, the other party probably won’t even know what coverage you carry and won’t decide to sue you based on your Umbrella. If you’re involved in a situation where it is necessary to take legal action and you would require more coverage, your Umbrella would kick in and give you coverage that otherwise, you would have to come up with on your own through your retirement, bank account, or other belongings.
9. I don’t have to list my 16 year old that just got their license. He/She isn’t really driving yet.
You ALWAYS have to list any drivers in your household that are licensed. Especially your 16 year old, newly licensed driver. The reasoning for this is that they have access to your vehicles on a regular basis and live in your household. If you don’t list your 16 year old when they get their license and they are involved in an accident, your insurance company could back up and make you pay past premium from the time they got their license until today. Some companies require listing a 15 1/2 year old as soon as they get their temporary license with no premium increase. Make sure you call our office for details!
10. If I call around and get quotes, my insurance company will cancel me!
This simply isn’t the case. Your insurance company can’t cancel your current policy in the middle of the term whatsoever. They have to give you 30 days notice before cancelling once your policy has been in effect 30 days. Most of the time, they will have no idea that you are shopping around. It’s always a good idea to shop your insurance rates to make sure you’re getting the best deal and then you might end up cancelling them!
November 4th, 2015 by BIG Agency