Car Insurance Myths That Cost Drivers Money

This is one of the oldest auto insurance myths in circulation. When you apply for coverage, insurers ask for your vehicle's make, model, year, trim level, and VIN — not its color. Rate factors that actually matter include the vehicle's safety ratings, repair cost, theft frequency, engine size, and your personal driving record. A red sports car may cost more to insure than a red sedan, but that difference is attributable to the vehicle type, not the paint.

Credit-based insurance scoring is distinct from the credit score lenders use, but it draws on similar underlying data — payment history, outstanding debt, and length of credit history. Insurers and actuaries have found statistical correlations between certain credit patterns and claim frequency, which is why most states permit its use in rate-setting. A handful of states, including California, Hawaii, and Massachusetts, restrict or ban this practice. If you're working to understand credit more broadly, common credit score myths explains how scoring works in plain terms.

State-mandated minimums represent a legal floor, not a recommended coverage level. A typical liability minimum might be $25,000 per person for bodily injury — a figure that can be exhausted quickly by emergency room bills, surgery, or extended rehabilitation. If damages exceed your policy limits, the injured party can pursue your personal assets and future wages to recover the difference. Most insurance professionals recommend carrying substantially higher limits than the state minimum, with the appropriate amount depending on your assets and risk tolerance. For an overview of coverage categories, understanding coverage types provides useful foundational context.

The word "comprehensive" is misleading in everyday usage. On an insurance policy, it refers to a defined set of covered events: damage caused by weather (hail, flooding), fire, vandalism, falling objects, and animal contact. A collision — meaning your vehicle striking another object or vehicle — is covered under a separate collision policy. Mechanical breakdowns, normal wear and tear, and routine maintenance are covered by neither. Drivers who assume comprehensive means "all-inclusive" sometimes discover this distinction only after filing a claim.

Rideshare companies generally provide some liability coverage when you have a passenger or an accepted ride, but the period between logging into the app and accepting a ride — known as Period 1 — often receives only limited coverage from the platform. Meanwhile, your personal insurer may deny claims that occur while the app is active, citing a commercial-use exclusion. Drivers who use their vehicles for rideshare should ask their insurer specifically about rideshare endorsements or gap coverage to avoid an uninsured period.

Whether and how much a claim affects your rate varies considerably. Some policies include accident forgiveness provisions that prevent a first claim from triggering a surcharge. Claim type also matters: a not-at-fault accident or a comprehensive claim (such as a cracked windshield) may have little to no effect on your rate with certain insurers, while an at-fault collision typically does. The fear of premium increases shouldn't automatically lead you to pay entirely out of pocket for a covered loss — but it's worth understanding your specific policy terms before filing. For more on this topic, insurance claims myths goes deeper into what actually happens at claim time.