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Drivers believe car insurance myths


July 26, 2005   by Canadian Underwriter


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A recent online survey of 1,000 drivers finds the majority of drivers believe common car insurance myths to be true, according to U.S.-based insurer Drive Insurance from Progressive. The survey found myths drivers believe include:
* 25% drivers believe insurers consider vehicle color when determining auto insurance rate but in fact auto insurance rates are calculated looking at information such as vehicle’s year, make, model, body type and engine size, driver information not color;
* 54% drivers believe car insurance rates are not regulated so insurers charge whatever they want but in fact, in the U.S. each state has regulators who review the information companies collect as well as the rates they charge; insurers cannot deviate from those rates. This is not yet a national reality in Canada.
* 48% of drivers believe comprehensive coverage protects drivers in all situations but in fact comprehensive coverage is one type of protection available on an auto insurance policy and it only pays for damage caused by an event other than a collision, such as fire, theft, or vandalism; it also covers weather-related damage, damage caused if a vehicle collides with an animal and it provides a rental car if a vehicle is stolen.
* 33% of drivers believe rental reimbursement coverage protects drivers who crash their rental car while on vacation but in fact the coverage pays for the cost of a rental car if a driver’s personal car is in the shop as a result of an accident and he or she needs a replacement vehicle.
* 51% of drivers believe bundling insurance coverages always results in a cheaper car insurance rate but in fact buying more than one product from the same insurance company doesn’t always mean they are getting the best rate available. In many cases there are savings to be had by talking with an independent agent or broker who can create a custom insurance package with policies from competing insurance carriers.
* 60% of drivers believe car insurance rates go down dramatically when drivers turn 25but in fact young and older drivers typically have the most car crashes and different car insurance companies’ customers have different claims experiences. In addition to age, however, insurers look at information about the vehicle, the drivers past claims history and the claims experience for other customers like them leading to a driver getting a higher, lower or the same rate when they turn 25.
Rick Crawley, product development general manager, Drive Insurance from Progressive, says “We hope that by debunking these myths, and by letting people know that independent agents and brokers can help separate fact from fiction, they’ll ultimately get the right coverage and services for their needs.”