Why These Myths Stick — and What They Cost You
Auto insurance is something most drivers buy out of legal necessity, then rarely scrutinize until a claim forces them to. That gap between purchasing and understanding creates fertile ground for myths. Misconceptions get passed along at family dinners, in online forums, and through anecdote — and when they go unchallenged, they quietly shape decisions that affect what drivers pay and how well they're actually protected.
Believing a myth about your coverage isn't just an abstract error. It can mean carrying too little protection, paying more than necessary, or finding out mid-claim that you're on your own. Before you renew your next policy or make a vehicle purchase, it's worth auditing what you think you know. For drivers who want to go deeper on what they might be missing, commonly overlooked car-buying decisions often compound the same misunderstandings.
Myth
Red cars cost more to insure because insurers charge a premium for bright colors.
Fact
Insurers do not factor vehicle color into premium calculations — not red, not black, not any other shade.
This myth has circulated for decades, but no major U.S. insurer uses exterior color as a rating variable. Premiums are influenced by the vehicle's make, model, trim level, engine size, safety record, theft rate, and repair cost — none of which change with a paint job. When shopping for a vehicle, focus on the factors that actually move your rate. The full breakdown of premium factors explains what insurers are really measuring.
Myth
Once your car is old enough, you can drop all coverage except the state minimum.
Fact
Whether to carry comprehensive and collision on an older vehicle depends on your financial situation, not just the car's age.
A common rule of thumb says to drop optional coverages when a car's market value drops below a certain threshold, often cited as around eight to ten times the annual premium cost of those coverages. But that threshold is personal. If you cannot easily absorb the cost of replacing or repairing the vehicle out of pocket, maintaining broader coverage may still make financial sense. Age alone is not a complete decision framework.
Myth
Your insurance follows you as the driver, covering any car you borrow.
Fact
In most cases, auto insurance follows the vehicle, not the driver — meaning the car owner's policy is the primary coverage.
When you borrow someone else's car, their liability and physical damage coverage typically responds first. Your own policy may provide secondary coverage in some situations, but this varies by policy and state. Permissive use rules apply, and if you borrow a vehicle regularly, you may need to be listed on that owner's policy. Never assume your coverage travels with you without verifying the specifics with an agent.
Myth
Filing a small claim is always worth it — that's what insurance is for.
Fact
Filing a claim for minor damage can trigger a premium increase that costs more over time than the payout you received.
Insurers in many states are permitted to raise your renewal premium after a claim, even a not-at-fault one in some cases. If a repair estimate is only slightly above your deductible, paying out of pocket may preserve your claims-free discount and keep your long-term costs lower. Consider the math before filing. The habits that keep your policy working in your favor include knowing when to self-pay minor incidents.
Myth
Your credit score has nothing to do with your car insurance rate.
Fact
In most U.S. states, insurers use a credit-based insurance score as one factor in setting premiums.
Research used by insurers has found a statistical correlation between credit-based insurance scores and claim likelihood, which is why most states permit its use as a rating factor. A few states — including California, Hawaii, and Massachusetts — prohibit the practice. If you live in a state where credit scoring is allowed, improving your credit can, over time, contribute to lower premiums alongside other factors like a clean driving record.
Myth
Comprehensive coverage protects you from everything — any damage, any situation.
Fact
Comprehensive covers specific non-collision events like theft, weather, and animal strikes, not all possible damage.
Despite its name, comprehensive coverage is not all-encompassing. It pays for damage from events like hail, flood, fire, vandalism, falling objects, and collisions with animals. It does not cover mechanical failure, normal wear and tear, or damage from a collision with another vehicle or object — that's what collision coverage addresses. Misunderstanding the boundary between these two can lead to surprises at claim time. Reviewing what each coverage type actually covers before you need it is time well spent.
What Actually Drives Your Premium
Once you clear away the myths, the real premium factors come into focus: your driving record, the vehicle's make and model, your ZIP code, annual mileage, the coverages and deductibles you select, and in most states, a credit-based insurance score. Each of these carries measurable weight. Color, loyalty assumptions, and the age of your car in isolation do not.
1 in 8
U.S. drivers estimated to be uninsured
According to the Insurance Research Council, roughly one in eight U.S. motorists drove without insurance in a recent study period, underscoring the real-world stakes of coverage gaps.
~45 states
States permitting credit-based insurance scoring
The majority of U.S. states allow insurers to use credit-based insurance scores as a rating factor, though rules on its weight and application vary by state.
Personal Policies Often Exclude Business Use
If you drive for a rideshare platform, deliver goods, or regularly use your vehicle for work, your personal auto policy may deny a claim that occurs during that activity. Rideshare companies typically provide some coverage, but gaps exist between when their coverage kicks in and when yours ends. Confirm with your insurer whether you need an endorsement or a separate commercial policy before assuming you're covered.
Minimum Coverage Can Leave You Exposed
State-mandated minimum liability limits set a legal floor, not an adequate safety net. A serious accident can generate medical bills and property damage claims that far exceed minimums, leaving you personally on the hook for the difference. Review your actual limits against your assets and income — not just the legal threshold. For a plain-language breakdown of what each coverage type means, see Auto Insurance Decoded.
Understanding what moves your rate is the first step to managing it deliberately. Drivers who review their policy annually — especially after major life changes like moving, adding a driver, or paying off a loan — tend to stay better aligned between what they pay and what they need. For a structured look at that process, smart habits for keeping your auto insurance working in your favor offers a practical framework.
This article is for general informational purposes only and does not constitute personalized insurance, financial, or legal advice. Coverage terms, exclusions, and rating factors vary by insurer and state. Consult a licensed insurance agent or adviser for guidance specific to your situation.
The content on this site is for informational purposes only and is not a substitute for professional advice. Always consult a qualified professional for guidance specific to your situation.