Auto insurance myths debunked

Maybe you have auto insurance, or maybe you don't own a car so you don't need it. Either way, you may be harboring some ill-conceived notions about the coverage. Let's take a minute to discuss common - but wrong - ideas about auto insurance.

1. Color matters
Insurance companies don't care about the color of your car and neither do the cops - unless they just think it's attractive. The police will pull you over and issue a ticket based on your behavior, not your paint job.

What does matter, though, is the type of car you have and how old it is. Different makes, models and years are more likely to be stolen, and a higher risk could mean a higher price tag. And don't think if you have an older car it's not going to be targeted. Many older cars are popular with thieves.

2. Any ticket will increase your rates
Getting speeding or moving violation tickets may increase the cost of your auto insurance. But if you have a good driving history and you end up with one speeding ticket, most likely your rates will stay the same.

3. Insurers can cancel policies at any time
Your auto insurance provider needs to have a reason to cancel your policy - it can't do it arbitrarily. The main reasons providers cancel policies are because people don't pay or are committing fraud.

4. The minimum is enough
Legally, you can purchase the bare minimum amount of auto insurance. It will be enough if you're pulled over and have to prove you have insurance. But it may not cover you if your car is damaged. A major accident could cost you a lot of money from your own pocket if your policy is too small, and if your car is totaled, your policy won't give you much toward a new car.

5. Full coverage pays for a new car
Some people think if they have full coverage and have an accident that totals their car, the policy payout will be enough to buy a brand new car. What actually happens is that your insurer will give you the amount your car is worth - not what a new car is worth.

There are many more myths out there about auto insurance rates. The best way to dispel them is to read your policy thoroughly and talk one-on-one with your insurance agent to understand the ins and outs of your coverage.

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