5 Things You Should Know About Your Car Insurance: Common Misconceptions

Insurance can be a confusing thing for many people to understand. There is a lot of incorrect information and misconceptions about car insurance that can cause you to lose a lot of money. Here are five common misconceptions that as a licensed insurance professional I always clarify with my customers. Read these before it is too late and you take the hit in your wallet.

Your personal items in your vehicle are covered by your auto insurance.

Wrong. If your purse is stolen out of your vehicle your car insurance will not cover it. Most insurance companies will only cover items that are attached, or can be attached to the car. For example, if your cell phone was in your purse when it was stolen it probably won't be covered by your insurance company. However, if it was on a charger that was connected to your car then it should be covered. Here is another example. If you added a sub woofer to your car and it was not bolted down it would not be covered, but if it was attached to the car it should be covered. This assumes that your insurer covers custom parts and equipment, which leads me to the next misconception.

Insurance will pay for theft or damage to any upgrades you have made to your car.

Wrong. If you have tricked out your car and have added really nice rims, chrome parts or even a $20,000 paint job and are in an accident your insurer will not pay to replace those items. Your insurance company will only pay if you have added custom parts and equipment coverage to your car and then only for whatever dollar amount you specified when you purchased the policy. If you don't have the coverage they will pay the fair market value for your car as it came from the manufacturer. Always keep your receipts for any modifications and it is a good idea to take a picture of the car with the additional parts.

You can use car rental coverage while your car is being repaired due to a mechanical break down.

Wrong. Car rental coverage will cover a rental car if you have an insurable claim. This is only if you opted to pay for that coverage when you purchased your car insurance. Of course there are limits on the dollar amount and how long it is covered. Can you rent a Ferrari while your Toyota is being repaired? Sure but know your insurance company will only pay a set dollar amount and you will have to pay the difference. Keep in mind that even if the repairs take longer than you expected, your coverage does have a limit on how many days it will pay. Regardless of the restrictions this is a good coverage to get because it is pretty inexpensive to add. It will save you a lot of money if you do need it. Plus it will save you time because your insurance company can usually get you a rental right away, regardless of who is at fault. If it is the other guys fault it may take a while to get a rental car from his insurance company.

You can tell your insurance company when to pay a claim and when to not pay.

Wrong. If you are driving a friend's car and get into an at fault accident, his insurance should pay for the accident. Insurance stays with the car. You can not tell your insurance company to pay for it since it was your fault. Your friend will not be happy to learn that his insurance has to pay for it and his deductible applies. Also if there isn't enough insurance coverage you and your friend can both be sued for damages.

Your Bodily Injury Liability coverage will cover your medical bills if you are in an accident.

Wrong. Bodily Injury liability protects the person you hit. It can have a per person/per accident limit or it can be a set amount per accident. If your state has personal injury protection then that coverage will pay for your medical bills. In some states you can get uninsured/underinsured coverage. Uninsured covers you if someone hits you when they are at fault and they do not have insurance. Underinsured covers you if they do have insurance but it isn't enough to cover your medical costs.

Before buying insurance go over your policy with your agent. If you have any questions or concerns ask now before you have a claim. Don't buy insurance in a hurry because you might miss some important information that you really need to know. Once you get a copy of your policy look it over carefully to make sure it covers what you want and be sure to note what is excluded or not covered. What you don't know can cost you a lot of money.