Finance

10 MYTHS REGARDING AUTO-INSURANCE

The most important factor while buying an auto insurance policy is to ensure you are fully aware of all the elements that influence your policy’s coverage and cost. Moreover, you should compare car insurance policies of various different companies before opting for one.

If you are based in the UAE, there are numerous websites that allow you to compare auto insurance policies such as PitStopArabia. Car insurance has become mandatory in various parts of the world including UAE. However, there is a lot of confusion regarding car insurance. Confusion leads to myths which keeps people puzzled. We will discuss 10 myths regarding car insurance in this article and hopefully be able to clear your confusion.

TOP 10 MYTHS

Here is everything you need to know about top auto insurance myths:

1.    AGE AFFECTS THE COST

People think that the cost of insurance increases if you are older. However, this is not true. In fact, older people who are over 55 years old may be eligible for discounts. In order to avail the discount, they may be required to participate in a collision preventative course. Moreover, citizens who are retired may also be subject to special discounts since they don’t get behind the wheels often. You should talk to your insurance provider regarding the eligibility as it may vary from company to company.

2.   RENTAL CAR GIVEN IN CASE OF ACCIDENT

People think that they’ll be provided with a rental car by the insurance company if their car gets into an accident or gets stolen. However, this may not be the case even if you have full insurance coverage. You need to avail this coverage separately by paying extra money. Even after that, there are limitations. The company will provide you with a rental car for a certain period of time. Moreover, you may most likely be required to pay for all the expenses related to the rented car from your own pocket and later make a claim for it.

3.   COLOR AFFECTS INSURANCE COST

There is a myth that the cost of your insurance depends on the color of your vehicle. This is absolutely wrong. You can have any type of color its cost will not be affected by it.  Its cost is associated with factors such as model, engine capacity, year of manufacture, manufacturer of car, repair cost, car safety features etc.

4.     RISK OF LOSING NO CLAIM BONUS

As the name suggests, a no claim bonus (NCB) is a markdown on the charges you obtain for not making any sort of claim on your auto insurance policy. There is a myth that if you change your auto insurance companies, you will lose the perks of NCB. However, this is not true. You can transfer your non claim bonus and it remains with you irrespective whether you go for a new insurance provider or not.

5.    INSURANCE COVERS FOR ALL SORTS OF DAMAGES

People without even confirming automatically assume that the insurance company will pay for every sort of damage including vandalizing, fallen tree, hailstorm damage, fire or flood and stolen car. In order to avail this coverage, you need to buy a collision and comprehensive insurance policy which is higher than the normal insurance policy. A normal policy does not cover for these damages.

6.   COVERAGE PROVIDED IF SOMEONE ELSE DRIVES

There is a misconception that if someone else driving your car gets into an accident, your insurance company will pay for the damages or provide coverage. However, this may not hold true. Insurance coverage may only be provided to the designated drivers. You should get in touch with your insurance company and confirm everything before handing your car keys to someone else.

7.   COVERAGE PROVIDED FOR BUSINESS USAGE

There is an important thing you need to understand if you use your car for business purposes. Personal insurance will not provide coverage for this type of car usage. It is better that you purchase business car coverage. Moreover, if you have different people driving your car, you should check their driving record first.

Read More: Individuals Disability Insurance

8.   CAN’T GET INSURANCE IF YOU ARE UNDER 25

Teenagers think that they are not eligible for insurance due to their young age. This is absolutely false. Anyone who has a valid driving license is eligible for insurance. However, the rates may vary. A rate given to an 18-year-old teenager with no experience will be different as compared to a person who is 30 years old with some experience.

9.   PARKING TICKET AFFECTS COST OF INSURANCE

Getting a parking ticket does not affect the cost of your insurance. In fact, parking tickets don’t even go in your driving record. Tickets which fall under the category of “moving tickets” go into your driving record and eventually affect the cost of insurance. Tickets which fall in this category and affect the cost of insurance include speeding tickets, using mobile phone while driving, stunt driving and drink driving etc. Parking tickets do not fall in this category.

10.  THE CREDIT SCORE HAS NO EFFECT ON YOUR INSURANCE RATE

The credit score is derived from your credit history. The score depends on how well you manage your finances. If you miss a payment or pay your bills after the due date, your credit score will undoubtedly be poor. The automobile insurance provider will consider you as a risk because they might think that you will miss your insurance payments. Hence, they will increase the rate. In contrast, a good credit score will help you get a good premium.

Wrap Up

If you have any questions in mind regarding the above content or any suggestions, please do not hesitate to contact us. Lastly, please remember that car insurance is mandatory in most countries worldwide. Therefore, avoid driving without insurance.

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