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Car Insurance Myths

Car insurance can be a confusing subject, especially when you don't have a base of knowledge to back you up. And when you don't have all the facts, it's easy to make false assumptions and bad financial decisions, leaving you wishing you'd done your homework in the first place.

To help you separate fact from fiction and avoid making costly mistakes when shopping for car insurance, we've compiled a list of five major myths that most drivers buy into because of a lack of information. Mull them over, get informed, and direct any questions toward a licensed car insurance agent, who can answer your questions and help clear up the details.

Myth #1: Teen car insurance is expensive—and there's nothing anyone can do about it!

Though teens always cost more to insure than adults, their rates run lower when they're willing to take responsibility for themselves and their driving habits. For instance, getting good grades, taking driver's education and keeping a clean driving record are all good strategies for lowering teen car insurance rates; adding your teen to your policy, rather than purchasing him one of his own, also helps.

These days, many insurance companies examine individual teen risk factors when establishing premiums, rather than lumping them all together in one big group. By driving safely, your teen can establish a favorable record, save money on discounts—and maybe even live longer!

Myth #2: Switching car insurance companies is a major hassle.

Not so! Though the process can be a bit intimidating, changing insurers can save you money—and sometimes get you better coverage too.

Whether you've changed jobs and want more extensive coverage; you lost your job and need something cheaper; you need to add another driver to your policy, or you ditched that sports car for something more conventional and cheaper to insure, reevaluating your insurance plan can save you some bucks.

It takes a little time and effort to cancel your policy. And your current insurer may not make things easy. But by planning ahead, requesting your cancellation early and making sure your coverage doesn't lapse in the process, you can often get and stay insured at a cheaper price!

Myth #3: You should avoid high deductibles like the plague!

Despite what you may have heard, setting your car insurance deductibles a bit on the high side is a good idea, depending on your savings and disposable income. As long as you have the finances to cover them in case of an accident, we'd suggest deductibles of $250, $500 or even $1,000. You'll spend more before your insurance kicks in, but you'll pay much less monthly, quarterly or annually.

Myth #4: If you're in an accident, your insurance company will pay to replace or repair your car to its original condition.

The minute you drive your car off the lot it begins depreciating in value. That means it's always worth less today than yesterday.

If you're at fault in an accident, your insurance company will pay for repairs to all vehicles you damage, returning each to its pre-accident condition, not its original value. (If another driver causes the accident, his car insurance company will do the same for you.)

Because of depreciation, you'll never recoup your original investment in your car. Keep this in mind as you shop for the right vehicle and the right level of car insurance.

Myth #5: You need all coverages available to feel good about your policy.

Most people don't need much more than basic car insurance. And if you don't need it, why buy it?

While it’s tempting to insure your car for every imaginable accident or incident, resist the urge to do so—especially if your vehicle is old, used, or already paid off. In such a case, it might make more sense to pay the damage out of pocket than to pay the cost of extra insurance.

Before you shop for car insurance quotes, let GIQ help you discover your options. Then get the facts and dispel the myths. You'll save yourself heartache and money—and find the affordable coverage you need.


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