Do you hesitate about owning a red car because you think they’re more expensive to insure? Well, that’s one popular car insurance misconception out of so many.
In this article, we’ll debunk five major car insurance myths and clarify the facts, so you can make informed decisions about your coverage. (For personalized advice, call Insure On The Spot at 773-202-5060.)
Does the color of your car affect your insurance rate?
Insurance companies do not consider the color of your vehicle when determining your rates. A bright red sports car doesn’t cost more to insure than the same model in white or black. What does affect your premium are the car’s make, model, body type, engine size, age, and safety features, not the paint job. So, if you plan on buying a bright red model, go right ahead without a single worry about expensive insurance.
Are older cars always cheaper to insure than newer cars?
It seems logical that an older, less valuable car would be cheaper to insure, but this isn’t always true. Some older vehicles hold their value or lack modern safety features, so they can cost just as much to insure as a new model of the same class. Insurance premiums are based on risk and potential payout. For example, a 10-year-old luxury SUV with expensive parts may be pricier to insure than a brand-new economy car. Likewise, if a certain older model has a high accident or theft rate, insurers will charge more for it.
When considering liability coverage, an older car might pose less risk to others (if it’s smaller or slower), but for collision and comprehensive coverage, an older car is actually more likely to be “totaled” in a crash due to its lower value.
Will one ticket or minor accident automatically raise your insurance rates?
Insurance companies look at your overall driving history. So if you have an overall good record and only one speeding ticket or a small fender-bender, your insurer might overlook it. Many insurers even offer “accident forgiveness” for the first incident. In some states you can take a defensive driving course to remove points from your license, helping avoid an insurance increase.
However, multiple tickets or accidents are a different story. Repeated violations signal you’re a higher-risk driver, which likely will lead to increased premiums. In such cases, the severity also matters. A single DUI or major at-fault accident can significantly raise your rate (or even require a special filing like an SR-22 certificate to keep your coverage).
Does your credit score affect your car insurance premium?
It may surprise you, but even your credit-based insurance score is used as a predictor of risk. Data shows that drivers with better credit tend to file fewer claims, so insurance companies commonly charge lower premiums to people with good credit. Naturally, if you have a poor credit history, you might be quoted a higher rate for the same coverage.
However, not all states allow credit in insurance pricing and a few have restrictions or bans. But in most places (including Illinois) it’s legal and widely used. Your credit score is just one factor among many (others include your driving record, claims history, location, and vehicle type). So paying bills on time, reducing debt, and avoiding new credit inquiries may boost your insurance score over time.
Is it OK to carry only the state-minimum liability insurance?
Legally, you must carry at least your state’s minimum auto insurance. For example, Illinois requires 25/50/20 liability limits at minimum. But relying on just minimum coverage can leave you dangerously underinsured. State-minimum liability insurance only pays for the other party’s injuries and damages if you cause an accident; it won’t cover any damage to your own vehicle or your injuries. If your car is stolen, vandalized, or crushed by a fallen tree, liability-only insurance pays nothing for your loss. And if you cause a serious crash, the bare minimum bodily injury limit may not fully cover the other person’s medical bills, leaving you personally responsible for the rest.
For most drivers, it’s wise to carry higher liability limits and add optional coverages like collision (to cover your car’s damage in an at-fault accident) and comprehensive (to cover theft, fire, hail, etc.). These together (often called “full coverage”) ensure your own vehicle is protected, not just the other party’s.
Does “full coverage” auto insurance cover everything?
The term “full coverage” can be misleading. If you have a full coverage policy, it includes the core protections, like liability (for damage/injuries you cause others), collision (for your car’s damage from an accident), and comprehensive (for non-collision damage like theft, fire, or hail). While this combo seems like it covers a lot, it still doesn’t protect you from 100% of all risks. This is what full coverage usually does not include:
- Medical payments/PIP: Coverage for your own medical bills (unless added separately).
- Uninsured/Underinsured Motorist: Protection if you’re hit by a driver with no or insufficient insurance (often added separately).
- Roadside assistance / Rental car coverage: Extra services that must be purchased as add-ons.
- Mechanical breakdowns or wear-and-tear: Auto-insurance doesn’t cover these at all.
Many drivers only discover the gaps in “full” coverage when filing a claim. For instance, without rental reimbursement, a “full coverage” policy won’t pay for a rental car while yours is in the shop. Therefore, it’s important to always read your policy to know what is and isn’t included. If you want truly complete protection, you may need additional endorsements (like gap insurance to pay off your loan if your car is totaled, roadside assistance, etc.).
Can I get car insurance if my license is suspended?
A suspended driver’s license doesn’t bar you from purchasing auto insurance. In fact, keeping insurance is often required for you to regain your driving privileges.
If your license was suspended due to serious violations (like a DUI or multiple offenses), the state will usually require you to file an SR-22 certificate (proof of financial responsibility) to show you have the mandated insurance coverage. An SR22 insurance policy isn’t a special type of insurance. Instead it’s simply a regular auto policy with an SR-22 form that your insurer files with the state (typically with the DMV or Secretary of State) to confirm you carry at least the minimum coverage.
You also need to keep in mind:
- High-risk insurance: You’ll need an insurer that covers high-risk drivers. (Insure On The Spot specializes in this and will e-file your SR-22.)
- SR-22 maintenance: The state (e.g. Illinois) will tell you how long you must maintain the SR-22 filing (often ~3 years for a major offense).
- Reinstatement steps: You must pay any reinstatement fees and complete other requirements (such as traffic school or treatment programs) before your license is reinstated.
Does my car have to be completely wrecked to be considered a total loss?
People often think a “totaled” car has to be a mangled wreck. In reality, an insurer will declare your vehicle a total loss if the cost to repair it approaches or exceeds its pre-accident market value. Each state and insurer sets a threshold (often around 70–80% of the car’s value) beyond which the car is considered totaled.
If your car is totaled, the insurance company pays you the actual cash value (ACV) of the vehicle (minus your deductible). More importantly, if you owe more on a car loan or lease than the car’s current value, insurance will only pay the value and you’re still responsible for the remaining loan balance. For example, if you owe $15,000 but your car is worth $12,000, the insurer might pay about $12k and you’d have to cover the $3k difference to pay off your loan.
To protect yourself in that scenario, you need gap insurance (Loan/Lease Payoff coverage). It covers the difference between your car’s ACV and what you owe on the loan or lease, so you aren’t stuck paying for a car you no longer have. It’s especially useful for new cars that depreciate quickly.
FAQ: Auto Insurance Myths and Facts
Q: Do red cars cost more to insure?
A: No, car color does not affect insurance premiums at all. Rates depend on your vehicle’s features and your driving profile, not the paint color.
Q: Is carrying only liability insurance enough coverage?
A: Not for most people. Minimum liability satisfies the law but won’t pay for damage to your own car or injuries. If you cause a serious accident or your car gets stolen or totaled, state-minimum insurance leaves you paying most costs out of pocket. It’s often wiser to add collision and comprehensive for better protection.
Q: Does one speeding ticket make your insurance go up?
A: Usually not if it’s your first minor ticket. Insurers often forgive a single minor violation when you have an otherwise clean record. Multiple tickets or a major offense (like a DUI) will likely raise your rates.
Q: What is an “SR-22 insurance” certificate?
A: It’s not a separate insurance policy, but a form your insurer files with the state to prove you have insurance after serious violations. If you need an SR-22, you must maintain your coverage continuously (Insure On The Spot can help file the SR-22 for you).
Q: What happens if I drive without car insurance?
A: You risk severe penalties. For instance, in Illinois driving uninsured earns a $500+ fine and a suspension of your vehicle registration until you show proof of insurance. Repeat offenders face longer suspensions and must carry an SR-22 for three years.
Understanding the truths behind these auto insurance myths will help you choose the right coverage and avoid costly mistakes. For any questions or a free quote, call Insure On The Spot at 773-202-5060. We’re happy to help you get the coverage you need at a price you can afford.