There are a lot of misconceptions about car insurance. We form our opinions of the industry through personal experience, talking to friends and family, or hearing about stories on the news–both positive and negative. At some point, we must take a step back and look at these common misconceptions that get passed around. View these statements from a different perspective and understand the truth about car insurance. Here are 5 Myths About Car Insurance Explained. Myth 1: The color of my car can raise insurance costs. Flashy colors will not raise your rate. This myth is simply not true. What is taken into consideration is the make and model of the vehicle. This includes the vehicle’s age, body style, and engine size. The insurance policy premiums will also consider the car’s value–the sticker price, estimated repair costs, and the overall safety specifications. Finally, the age of the driver, as well as driving record and credit history will be used to determine the rate. Myth 2: My car insurance rates will rise after a claim. Insurance companies have many things to consider when to comes to determining a customer’s policy rates. Among the highest of factors is the driver’s history. It is best to practice safe driving and to notify your insurer when an accident occurs–even minor ones. Remember that any incident reported to police, will be discovered by your insurance company through public records. Also, in the event that another driver files a claim on an incident with which you were involved, expect your insurance company to follow up on the matter. As a voluntary customer, you obtain the right to change insurers if you are displeased with your current rate. Myth 3: My car is automatically covered by insurance when stolen, vandalized, or damaged by mother nature. The details are in the writing. Be careful to verify the coverage offered in your policy. Comprehensive and collision coverage is not part of the package. These options must be selected as part of the additional options to the standard liability policy. Most lenders will expect this coverage to be elected though it may not be required. If the value of the vehicle is $1,000 or less than 10 times the insurance premium, optional coverage add-ons can be pricey and unlikely worth the expense. This coverage will protect the car in the event of vandalism or fallen tree damage done to the vehicle. Myth 4: My personal credit score doesn’t factor into my car insurance rates. When an insurance company is determining your rates, it considers a variety of factors. The vehicle’s make and model, it’s body type and engine size, your age, driver history, and yes, your credit score. Insurance agent’s main question is “How likely are you to put in claims on your insurance?” They make their determinations based on your risk to the insurance company’s bottom line. How you manage your financial affairs is a major factor in assessing this risk. An FTC study showed that credit score can accurately determine accident risk. The best way to combat this is to, at the very least, have a great driving record. Demonstrating that your driving does not pose a risk can prove to insurance companies that you are a good fit. Myth 5: I only need the minimum amount of car insurance required by law. We saved the most complicated myth for last. Technically, yes, you only need the minimum amount of car insurance required by law. This doesn’t mean, however, that this is your best option. Considering your route to work, annual weather patterns, and the people you transport are all important in determining what coverage is best for you. Some may feel that the minimum works for them. Others realize that for a slight rate increase they can add additional amounts to their liability insurance that covers both property damage and bodily injury. Remember, insurance is an “in case of” emergency solution. The world is full of hazards just waiting to get in your way. You won’t be able to prepare for them all. With the minimum insurance required by law, the out of pocket costs may be astronomical in a worst-case scenario. The chances of this happening may be slim but they do occur. Having the peace of mind that you, your car, and your cargo are all covered relieves tremendous stress on yourself and your finances. Car insurance should be easy to figure out. Here’s what we want with our coverage and here’s the price. The reality is a little more complex so it’s important to know how it works. These 5 Myths About Car Insurance Explained has hopefully guided you to an understanding of the industry. Your insurance should work for you–paying your hard-earned money for coverage that you can rely on is essential. Have the confidence to get the best plan that works for you the next time you shop for car insurance.