from – Your Insurance Advisor, Hometown Insurance Agency
Myth 1 – Everyone has auto insurance because they have to have it
The Insurance Research Council (IRC) estimates that 1 driver out of every 7 drivers in the United States is currently uninsured. This is especially startling considering that an accident with an uninsured or underinsured driver can result in significant costs that aren’t covered by a basic liability insurance policy. In the event of an auto accident, supplemental uninsured motorist (SUM) coverage – also called uninsured motorist bodily injury (UMBI) insurance – will cover you and your passengers for:
- Medical expenses
- Pain and suffering
- Lost wages
Under this car insurance policy, you and your passengers will also be covered if you are the victim of a hit-and-run accident. Check your policy! Your supplemental uninsured motorist coverage should match your bodily injury liability coverage.
NOTE: In some cases, a driver might have some liability insurance but not enough to cover your injuries and/or damages. Underinsured motorist coverage can be used to offset the costs.
Myth 2 – If other people drive your car, their auto insurance will cover them in the event of an accident
In most states, the auto insurance policy covering the vehicle is considered the primary insurance, which means that the owner’s insurance company must pay for damages caused by an accident. Policies and laws differ by state, and you should be familiar with these differences when allowing another person to drive your car.
Myth 3 – Your credit has no effect on your insurance rate
Your credit based insurance score does matter. An insurance score is a measure of how well you manage your financial affairs, not your financial assets. Many insurance companies take your insurance score into consideration when you want to purchase, change or renew your auto insurance coverage. Because the majority of people have good credit, and insurance scores are derived from a person’s credit history, most people pay less for insurance when insurance scores are entered into the pricing equation.
Myth 4 – Your insurance will cover you if your car is stolen, vandalized, or damaged by falling tree limbs, hail, flood or fire
Comprehensive and collision coverage are optional. Lenders frequently require drivers to buy comprehensive and collision coverage as a condition of a car loan agreement. Those driving older cars sometimes drop these coverages as a way of saving money. If a car is worth less than $1,000 or less than 10 times the insurance premium, purchasing the optional coverages may not be cost effective. But bear in mind that you need to purchase both collision and comprehensive coverage in order to fully protect your vehicle from all types of damage.
Myth 5 – It costs more to insure your car when you get older
This can be true depending on the insurance carrier, however the best way to keep your auto rates down is by having a good driving record. Drivers can qualify for a reduction in auto insurance rates, typically 3 years, if they have successfully completed an accident prevention course. Insurance companies will often provide up to a 10 percent discount on car insurance for mature drivers.
To review your current coverage and insurance options, call your Hometown Personal Account Representative at 631-589-0100.