If I told you the number of phone calls I get in a month where not just consumers but other business professionals explain to me the in’s and outs of insurance… you would laugh. Why you ask? Well because I of course do this for a living, they of course do not. Still lost? Here follow me in the rabbit hole.
Red cars cost more to insure because they “look faster” when they are driven.
Installing Lo Jack in my Car will save me the same amount on my insurance as it cost to put in.
Yeah, all my speeding tickets are paid so none will show up on my record
Sound familiar? You might not have heard them all like I have, but you at least have heard one or two that stick around in your mind. The ancient insurance myths that sadly get passed around like a cheese tray at a New Years Eve Party.
I don’t know when all of a sudden bankers, car dealerships, or even our neighbor Joe down the street became experts on insurance but… I have set out to answer some of the most common and most hilarious insurance myths out there.
Some of which might actually shock you but the point of this article is not only to educate you but to maybe challenge the way you are currently looking at your existing insurance policies.
MYTH #1:
My insurance company will cover a new roof when it comes time to replace it
No. No they will not. Insurance companies are not “maintenance or home warranty companies“. An Insurance company’s primary job is to make you whole again. Let that sink in for a moment. What this means is that when you have a loss/claim the job of the insurance company is to put it back together and make you whole again (per your policy guidelines). It is not meant for a gain/profit. By replacing a roof that needs maintenance or simply just “because it is time” we are providing you a warranty product instead of a sudden and unforeseen coverage which is outlined in your homeowners policy.
MYTH #2:
I have a teenage driver in the household and they don’t need to be listed on the auto insurance policy
Nothing chaps my bottom more than this myth. Why do you ask? Mostly because there are actually insurance agents out there who believe this myth themselves! So let’s take a minute and break this down easily so everyone can understand why this is indeed a myth:
- By not putting your teenage driver/other drivers in household on the policy you are opening yourself up to a potential declination of a claim.
- By not putting your teenage driver/other drivers in the household on the policy you are risking a cancellation from your insurance company if they should find out you had undisclosed drivers in the household.
- By not putting your teenage driver/other drivers in the household on your auto insurance policy you are running the risk of a premium back charge (when an insurance company can charge you in arrears for the amount of time they should have been listed on the policy).
I could go on and on here… but you get the point. If they live in your household and drive you need to consult your independent insurance agent promptly to make sure adequate coverage is in place.
MYTH #3:
If I purchase a specific color vehicle it will affect the amount I pay for my auto insurance policy
This is asked frequently and it is completely FALSE. Insurance rates are based off of things such as year, make, model of vehicle. In addition to date of birth of driver, zip code where they live, and oh so much more. However, one rating factor not considered is the color of the vehicle. So if your heart tells you that you should go with the lime green Volvo over the Pearl White one… then you make sure to purchase a matching lime green steering wheel cover to match and drive on off that lot!
MYTH #4:
My neighbor Joe is borrowing my car this weekend, his insurance will cover my car if he is in an accident
Sadly… this one is definitely false. Every state has its own laws and regulations, however, in the State of Arizona the insurance follows the vehicle. Example… even though Joe crashed your car, your insurance will be picking up that bill my friend. There are some rules and regulations in place that would allow Joe’s policy to cover any excess however its always best to talk with your agent before letting anyone else drive your vehicle that isn’t typically insured on your policy if you have questions. So just to recap, unless your good with covering Joe’s inability to navigate through rugged terrain… then best not to let him handle your vehicle.
Myth #5:
My home is older so it is cheaper to insure
This one is also… you guessed it, FALSE. Ok so in order to really cover this one from the inside out we need to establish some ground rules. I need everyone to understand that homeowners insurance rates are a giant combination of replacement cost of home, square footage, location of home, prior claims, etc. As you can the list could go on and on. However… one thing we need to focus on here is the year built of the home can actually cause a slight rate increase if you are shackin up in an older home. Why you ask? Well the older the home the higher risk for claims to happen. Easy and as complicated as that. By doing renovations and upgrades in your home this can help, however you never want to assume because the home is older that it would make sense to have a lower insurance premium. Most cases is quite the opposite.
Myth #6:
I paid my last speeding ticket so it is not going to show up on my record
In the State of Arizona there are two ways a speeding ticket can be completely removed from your record.
- You go to defensive driving school
- You fight the ticket in court and a judge dismisses it
If you pay the speeding ticket it is an admission of guilt and boom… it’s on your record. You might as well tell your insurance agent, because they will find it typically both when trying to write you a new policy and even at your renewal of your existing one ;).
Myth #7:
The car sales man at the dealership told me by installing Lo Jack I get a huge auto insurance discount
I feel the need to define “huge”. If by meaning it would make up the cost for the device… then no. Sorry. Not even close. If the sales person means from 2-10% then ok maybe now we are getting closer to talking. Some carriers offer a discount and just to be fair…some do not. It is imperative that you talk to you independent insurance agent about the discount being available. Not all carriers are alike and they shouldn’t be presented in a generality.
Myth #8:
I have to use the recommendation of the insurance company to complete my claims/loss services
The reason I felt this was important to cover is because all too often we feel like we have no “choice” when it comes to claims scenarios. We are so used to being in high alert mode from the claim that we often don’t realize that we as a consumer have the right to use whatever service provider we choose to help us with claims services.
Example: You have a windshield that needs to be fixed. You call the insurance carrier and they ask you if you have a glass company you would like to use or if you would like to be connected to a Preferred Service Provider.
In this situation insurance companies have already vetted the service provider for you by using multiple channels. In most cases they will also warranty their work since they are considered a Preferred Vendor. However, what it is important for you to understand is that you as the consumer have the right to choose who you would like to do the work. So make sure to ask questions and if that neighbor Joe is your trusted Collision center owner and you would like to use him, just know you can.
Myth #9:
If my insurance premium goes up I am stuck having to make coverage changes to alleviate some of that increase
FALSE. FALSE. FALSE.
Did I mention False? What a lot of consumers don’t realize is that if your premium goes up at renewal it could be due to several factors. Some of which are going to be completely out of your control. However, let me let you in on a little secret. If you choose to work with an independent insurance agent who can write business for multiple companies this fix is an easy one. They can look at your renewal, re-shop your rates and shop with you to make sure you are still getting the best rates and coverage. Take peace in knowing if your independent insurance agent can’t find you a better rate within their multiple carriers there very well just might now be one out there. Don’t let an insurance agent try to cut your coverages or increase your deductibles to cut rate before you shop with an independent insurance agent.
Part of my job as an independent insurance agent is not just to provide rates like an order taker (would you like fries with that?). It is to make sure you as a consumer are educated as to what the meat and potatoes are of your insurance policy. These myths above are just a very small list of the ones I have debunked in my career as an insurance agent. I will have many many more years of them. What my hope in providing you with some of these myths is that if you have further questions that you might think are too silly to ask, that you know they are not silly. They are worth the phone call and who knows, maybe I’ll end ordering you that matching Lime Green Coffee mug for your new ride :).