Red cars and big crashes: 7 biggest insurance myths

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Any confusion over what to buy or how to use a product can end up being costly, but when it comes to insurance, misunderstandings can end up costing thousands of dollars.

We set out to find the worst sources of confusion, based on common insurance myths. Insure.com asked 2,000 adults whether seven statements were true or false. All the statements were false. We also looked at who believes each myth more – women or men.

Here’s how the seven car insurance myths rank, along with the correct information.

1. Red cars cost more to insure because they get pulled over for speeding more.
46% think it’s true (52% women, 48% men).
Tip: Car color doesn’t affect insurance rates and insurance companies don’t use it in their calculation of rates.

2. If I cause a crash with extensive damage to others, my auto insurance company can cancel me immediately.
44% think it’s true (50% women, 50% men).
Tip: Most states have laws that prohibit insurers from canceling you mid-term due to a claim. If the insurer doesn’t want your business, they generally have to wait until your policy period is up and then they can send you a notice of nonrenewal. However, you can be canceled at any time for not paying your premiums.

3. Small cars are the cheapest to insure.
40% think it’s true (42% women, 58% men).
Tip: Small and mid-size SUVs and minivans are the cheapest to insure. In the 2014 model year, the Jeep Wrangler Sport is the least expensive vehicle to insure, according to Insure.com’s study of rates. Small cars do not have the cheapest rates because they are often chosen by younger, inexperienced drivers who submit more claims. Also, injury claims are higher from small cars, which lack the weight and protection offered by larger vehicles.

4. Comprehensive auto insurance covers everything and anything.
32% think it’s true (41% women, 59% men).
Tip: If we could go back in time, we should never name it “comprehensive coverage.” Even “non-accident specific-problem coverage” would be less confusing to car insurance buyers. Comprehensive  coverage pays for certain problems such as car theft, storm damage, animal collisions and vandalism.

5. Thieves prefer to steal new cars.
29% think it’s true (42% women, 58% men).
Tip: Older cars are more valued among thieves because the market for their parts is bigger. If you want to cover car theft, buy comprehensive coverage.

6. If my friend borrows my car and crashes it, their insurance will pay for damage.
25% think it’s true (48% women, 52% men).
Tip: Handing your car keys to a friend or relative is like handing them your insurance future. If they cause damage, the claim goes on your auto insurance policy and can affect your rates for years to come. And they probably won’t offer to chip in.

7. Out-of-state speeding tickets can't follow you home.
13% think it’s true (34% women, 66% men).
Tip: Those tickets can follow you, and can affect your car insurance rates.  This myth had the biggest disparity between men and women among the survey questions, with far more men believing they could get away with speeding in another state.

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