Several auto coverage myths are going around that could be costing you more each month. Read on to get the auto insurance facts.
The rules of the road are usually transparent from state to state. They’re in the DMV handbook and, short of a frank exchange of views when someone cuts us off, there’s usually no debate about what’s right and what isn’t. But it’s a different story when it comes to the enduring confusion surrounding some aspects of auto insurance.
NICRIS Insurance is dedicated to keeping you informed by sharing valuable tips drivers can use to save money. We’re now spotlighting six of the most common misunderstandings to help drivers separate the motoring maxims from the persistent myths—and optimize their premiums in the process.
If you’re unsure of any of the following, it could end up making a significant dent in your auto coverage rates:
Myth #1 – Everything inside my car is insured if the car is
From cell phones and laptops to money and important documents, parked cars can be a treasure trove for thieves. Many people think that having auto coverage protects their stored property. It typically doesn’t; only the parts of the vehicle, such as doors, windows, and so on, are covered.
You’ll need to look into a homeowners policy, a renter’s policy, or a personal property plan to recoup losses from a vehicle break-in.
Myth #2 – NY is a no-fault state, so I’m blameless in accidents
This one is right up there with the color of your car raising or lowering your premiums (also not true). No-fault doesn’t mean that nobody’s to blame; it simply means that insurance companies will pay out to cover the damages without taking sides. It sounds good, but things can get messier and more expensive from there.
If you injure someone in an accident and the cost to cover their care exceeds your coverage limits, you could find yourself liable for their medical costs. New Yorkers can also sue another driver for pain and suffering, which could skyrocket the “faultless” driver’s expenses. Don’t expect no-fault car insurance to pay for the damages to the other driver’s vehicle, either; it only pays out for people, so you’ll need to have property damage liability protection in place (see item number two on this NY DFS page).
There’s really only one situation where you can be blameless, and that’s if you’re the victim. Even then, that isn’t necessarily a safe financial place to be. Being blameless could still mean having to use your own insurance to cover your injuries which may spike your premiums even though you carry no fault in the incident.
Myth #3 – Credit score and car coverage aren’t linked
In truth, assessing credit scores is an unpopular but common practice by NY insurance providers that’s slowly gaining opponents. All but five states won’t use your credit history to calculate your auto premiums. But New York isn’t one of them.
The good news is that New Yorkers can’t have their auto coverage application rejected based solely on credit information. The NAIC gives a good explanation of the difference between a credit-based insurance score and your FICO score (insurers use the first one to set auto rates).
Myth #4 – Insurers don’t need to know about customizations
Even something as simple as a new paint job can boost your vehicle’s value and thus impact your premiums. Generally, auto improvements make a car faster, safer, more comfortable, or more stylish. But all such improvements can increase the vehicle’s potential cost to repair when they fail or are damaged in an accident, with any speed-boosting modifications being of particular concern for insurers since they’re an equal boost to your risk profile.
It’s wise to consult your insurer before going ahead with any mods, as this will give you a better idea of how much something could add to your rates (or lower them in the case of safety features like car alarms). You can also look into custom parts and equipment coverage. These two steps can avoid auto claims being denied or even a policyholder being dropped entirely by a provider.
Myth #5 – New cars don’t need new insurance
Buying a new car will, at best, give you a few days’ grace under your old auto coverage policy before you have to arrange new protection. It’s possible that your replacement will have different features (better onboard tech or a different loss history than the previous model, for example). These changes decide how much of a liability your new vehicle is in the eyes of insurers.
Myth #6 – Presuming you’re not a high-risk driver
So, you like to drive safely, drink responsibly, and kit your vehicle out with safety features. Your insurer knows all they need to classify your risk, right? Wrong—and especially if you own a motorbike in NYC. The presumption that you’re not a high-risk driver could cost you dearly if you don’t disclose all possible metrics to your provider.
For example, you may be one of the millions of Americans on regular medication. The meds and their associated condition could present high-risk factors to insurers who aren’t likely to pay out for a medically related accident if you weren’t clear about your condition from the start.
Being at either end of the age spectrum can classify you as high-risk, as can on-road use of electronic devices like cell phones, tablets, and car radios. And don’t forget: a flawless driving record can be viewed as secondary to a poor credit score when evaluating your risk. A defensive driving course can be a great way to increase your risk awareness and lower how much of a danger your insurer thinks you pose.
Speak to NICRIS to dispel any auto insurance doubts
There’s no good reason that responsible drivers should get a nasty surprise on their premiums. Knowing every factor that might impact your rates for better or worse is the only way to save every possible penny. Our team can offer extensive advice and insight, and we’re here to answer all your coverage questions. Contact NICRIS at the link below to get the facts on car insurance.
NICRIS Insurance focuses on providing clients with the appropriate suite of products to protect them, their interests, and their loved ones. If you need some insurance advice, just drop us a line, visit our offices Monday to Friday 9 to 5, or call (516) 544-0006.