Common Auto Insurance Myths That Cost Drivers Money

This myth is remarkably persistent, but color simply doesn't appear in any standard insurance rating formula. What insurers do look at includes the vehicle's make, model, trim level, engine size, age, safety ratings, and theft statistics — none of which are color-dependent. A red sports car may cost more to insure than a red sedan, but that's about the vehicle type, not the paint.

The name is misleading. Comprehensive coverage (sometimes called "other than collision") protects your vehicle from a defined list of perils — weather events, vandalism, animal strikes, fire, and theft are common examples. It does not pay for damage from hitting another car or object (that's collision coverage), and it doesn't cover mechanical failure, normal wear, or personal belongings inside the vehicle. See what each coverage type actually covers for a side-by-side breakdown.

State minimum requirements typically cover only liability — meaning damage you cause to others. They don't pay to repair or replace your own vehicle. If you can't comfortably absorb the cost of losing your car outright, dropping collision and comprehensive entirely may not be the right move regardless of age. The calculus also involves your deductible and whether a lender requires coverage. Weighing full coverage against liability-only can help you think through this.

A credit-based insurance score is not identical to your standard credit score, but it draws on similar underlying data. Insurers use it because research has found a statistical relationship between credit history and claim likelihood. A few states — including California, Hawaii, and Massachusetts — prohibit or restrict this practice, but in the majority of states it can be a meaningful factor. Why your premium is what it is walks through the full range of rating factors insurers commonly use.

State minimums vary widely but are frequently set at levels like $25,000 per person for bodily injury. A multi-vehicle accident with injuries can easily generate liability exposure many times that amount. If a judgment against you exceeds your policy limits, your personal assets — savings, wages, property — may be at risk. Higher liability limits cost less than most drivers expect relative to the added protection they provide.

Whether and how much your rate changes after a claim depends on several variables: who was at fault, your prior claims record, the claim type (a comprehensive weather claim is treated differently from an at-fault collision), and your insurer's specific rules. Some policies include accident forgiveness provisions. That said, frequent claims — especially at-fault ones — do typically affect your premium over time. If you're unsure whether to file, it's worth understanding the process first: how a claim typically unfolds gives a clear walkthrough.