A new report by insuranceQuotes.com, an online insurance comparison website, shows that millennials fall for many common misconceptions about car insurance.
Does owning a red car jack up your insurance rate?
About half of millennials wrongly answer yes, according to a new report by insuranceQuotes.com, an online insurance comparison website.
The question was part of a poll of 1,000 Americans about common misconceptions about car insurance. The findings show that car owners aren’t very knowledgeable when it comes to their insurance, especially young adults.
“These results indicate that millions of Americans need a refresher on what insurance does and does not cover,” said Laura Adams, insuranceQuotes.com’s senior analyst, in a news release.
While many people believe the color of the car you drive affects your insurance premium, it isn’t true. Instead, what matters is the type of car. For example, a high-end end sports car will cost much more to insure than a standard sedan.
Confusion also exists on what auto insurance covers. More than half of people surveyed ages 18 to 29 – millennials – incorrectly said that their insurance wouldn’t cover them if they caused an accident.
However, liability insurance, which is required in most states, covers damage you cause to someone else’s car when you are at fault. Though to have your own repairs covered, you would need collision insurance, which is optional and many people don’t have.
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Another misconception relates to the amount an insured receives when a car is totaled. About 29% mistakenly thought their insurer pays only the value of their car after the crash, and another 12% said they didn’t know.
But insurance pays the market value cars had before the crash. In addition, some policies now offer new-car replacement on newer cars with low mileage that pays the amount the car would cost new instead of the depreciated value.
When it comes to insurance paying for mechanical repairs, millennials and people earning less than $30,000 were more likely than other groups to be misinformed. Car insurance doesn’t pick up the tab for mechanical problems and, unless a repair is covered under warranty, the owner is responsible.
Car insurance also doesn’t cover items stolen from the vehicle. Overall, about one-third of people surveyed thought they would be reimbursed, with young people being better informed than older people. Typically, renters’ or home insurance covers theft from vehicles, provided the item is worth more than the deductible.
Respondents of the survey done by the Princeton Survey Research Association International did best when polled about whether your address affects your insurance rate. Three-quarters correctly answered yes.
