5 Common Car Insurance Myths

But being complacent about your insurance is risky. Not least, there are many misconceptions and myths about what car insurance actually covers. Not knowing the ins and outs of your policy could end up costing you when you need your coverage most. 

Be aware of these five common misconceptions about insurance coverage: 

1. State-minimum coverage is really all I need

Typically, drivers are required to have policies that meet state-minimum liability coverage that pays for the other driver's injuries and property if you cause an accident. 

However, state-minimum coverage provides limited protection. If you're in an accident that causes substantial damages or injuries, you may need higher coverage limits to protect your assets. 

Also, liability-only policies don't provide coverage for your own vehicle. Instead, you may need coverage that combines liability insurance with collision and comprehensive protection. 

2. All car insurance policies cover car theft

It's a terrible feeling: You walk out to where you parked your car overnight, only to find an empty parking space. To add insult to injury, if you don't have the right car insurance, you may not have any recourse. 

Some people think because they have car insurance, they're covered against events like theft or vandalism. But these are only covered if you have comprehensive insurance, which covers damages or losses due to incidents beyond collisions. 

3. If the other driver is at fault, I don’t have to worry about my insurance

In an ideal world, if you're rear-ended by another driver, the driver's insurance company would swoop in, reimburse you for your losses quickly, and you'd be back on the road in no time. In reality, it can be much more complicated. 

Even if the other driver admits fault, they may have inadequate coverage (or no insurance at all). Although you could sue for the damages, collecting the money owed may be nearly impossible. As a result, adding uninsured and underinsured motorist protection to your policy can be a good idea; this form of coverage helps pay for damages if the other driver's coverage is insufficient. 

If you live in a no-fault state, your own insurance typically covers your medical expenses and other related costs, regardless of who caused the accident. 

4. Comprehensive insurance covers wear and tear

Comprehensive insurance can be reassuringly useful. If a tree falls into your windshield, if a deer dashes out in front of your car, or if your car window is smashed by thieves, comprehensive coverage helps reimburse for repairs. 

However, comprehensive insurance does not cover basic wear. If your car starts leaking oil or the transmission starts making a terrible grinding sound, you're responsible for the repairs — which are not covered by your insurance policy. 

Keeping up with car maintenance is your own responsibility, so follow your manufacturer's guidelines for maintenance and service appointments. And as a bonus, a well-maintained car may help lower the likelihood of an accident. 

5. Personal auto policies cover rideshare or delivery driver

If you’ve taken a side gig as a rideshare or delivery driver, pay attention to your insurance. Many people think they’re adequately covered between their personal auto insurance policy and the rideshare platform's insurance. But that's not always the case. 

The rideshare platform's coverage only comes into play in certain scenarios, such as when a customer is in your car. And, your personal auto insurance policy likely excludes any incidents that occur while the car is being used for business purposes, so certain claims may not be covered. 

The solution? You can contact your insurer and ask about adding a rideshare endorsement or rider to your policy. Adding rideshare coverage to your existing policy is relatively affordable, and can provide additional protection.