No one likes to buy auto insurance. It’s complicated. It’s expensive. And who understands how the premiums are determined? Maybe that’s why there is so much misinformation about insurance coverage and pricing.
The non-profit Insurance Information Institute helped me tackle five common auto insurance myths:
Myth 1:
Red cars cost more to insure
If you believe the owners of red cars drive more aggressively and get more speeding tickets, this would make sense. But there’s no data to back this up.
“Frankly, it doesn't matter whether the car is red or green or purple," said Loretta Worters, vice president of the Insurance Information Institute.
Insurers are not concerned about color and neither is law enforcement.
“We look at behavior, not appearance,” said Bob Calkins, a spokesman for the Washington State Patrol. “We don’t profile people, and we don’t profile cars.”
Insurance companies do care about the type of vehicle you drive, including the make, model, sticker price, engine size and year. Is it popular with thieves? Is it more costly to repair? Does it have a good safety record?
There does appear to be correlation between vehicle model and the likelihood of a traffic ticket. A recent study by Quality Planning (a San Francisco-based analytics company that works with auto insurers) found that drivers of flashy cars are often more aggressive and therefore a greater risk.
Based on this study, drivers of the Mercedes-Benz SL-Class convertible are four times more likely to be cited for a moving violation than the average driver. Quality Planning’s list of Top Ten “Spirited Vehicles” includes Toyota’s Camry Solara Coupe, Scion’s TC Coupe and the Hummer H2/H3 SUV.
Other factors that go into determining your premium: how many miles you drive each year, when you drive, where you drive and if you’ve had any previous accidents. These days your credit history is also considered. Insurance companies say their data show people with a good credit history are less likely to file a claim.