When it comes to insurance it can be hard to distinguish what’s a myth and what’s the truth. Did your mother once tell you that she couldn’t buy you the red car of your dreams because the insurance would be higher? Did you get a ticket while on vacation in Georgia and think it won’t follow you home to Florida? Here are some common myths in the insurance world and the hard facts about them all.
Red cars are more expensive to insure
Despite their inherently flashy nature in reality color isn’t a factor in determining insurance cost. According to Esurance, the most important factors that influence your premium are your driving record, age, marital status, gender, and where you live. If a red car is your dream don’t worry about it increasing your insurance costs!
If someone borrows your car and damages it then their insurance covers it
We’ve previously done a blog about how insurance is determined when you borrow a car or lend someone yours. If you give an individual permission to borrow your car then your insurance coverage will follow them in case of an accident.
Purchasing insurance for a home? Base it on real estate market value
According to Insurance Journal, this is a myth that more than half of the individuals surveyed thought was true. Rather than using the real estate market value to determine your insurance needs you should figure out the cost of rebuilding. According to the Wall Street Journal, having a homebuilder walk through and estimate the cost of a rebuild (and taking into consideration furnishing) is an effective way to ensure you’re getting proper coverage.
Out-of-state speeding tickets can’t follow you to your home state
This myth may seem more like a wish especially when a ticket comes at the end of a vacation, but make sure you’re taking care of tickets. The DMV website claims not only are states probably sharing driver database information, but your home state could end up penalizing you for lack of payment. It could be tempting to ignore the ticket, but in the end it will catch up to you.
You can only sign up for health insurance during the open enrollment period
While in most cases you will be penalized for not purchasing insurance during the open enrollment period there are some exceptions. If you have a life event that qualifies you for the Special Enrollment Period, such as, getting a new job, having a baby, or getting married then you can sign up outside of the enrollment period.