There seems to be a lot of stories circulating all over the place about car insurance. It's high time that you will be able to know the truth. First, it will help you judge if you truly need car insurance and what type of policy you should look for. It will also remove the stigma that's commonly associated with auto insurance.

Common Myths

1. The one who has caused the accident should bear the responsibility.

It's not wrong to be a very gracious or even a generous car owner. In fact, it surely is so nice of you if you will allow your friend or family member to borrow your car for some reasons. However, you have to keep in mind that if he meets an accident and there are damages to your car, he's not the one who's going to pay for it but you. After all, it's not his name that's being reflected in the records of the insurance companies but yours. You can perhaps strike a deal with your friend or family member. Surely, they'll be considerate of your financial position.

2. The rate of your insurance is dependent on that of the government.

The fall and rise of interest rates of your mortgages and even your car loan may rely on what's happening with the economy of your country, but it doesn't affect your car insurance rate. This is being defined by the car insurance company itself, though you may find that rates have become almost similar. You can attribute this to competition. They can't afford to go very high, or they will lose their clients. On the other hand, they cannot be that low that they will be monopolizing the industry.

3. You only need a collision insurance to fully cover your car.

Cars are very prone to accidents and getting damaged by objects - that's a fact. What car owners don't know, however, is the truth that if you only avail of collision insurance, you won't be getting anything if your car had been destroyed by fire or hail, was stolen, or even vandalized by some punk or gangster out there. If you want complete coverage, go for comprehensive and collision insurance policies. Of course, they can cost more than collision insurance alone, but it's so much better than having to pay for the damages yourself and even the maintenance and repair.

4. The color of your car can influence the rate of your car insurance.

If government doesn't have any power over your car insurance rate, what then? There are actually many. First of all, you have your credit score. Just like when you're applying for a loan in a bank, your credit report will determine what will be your interest rate for your car insurance. Other factors also include the specifications or your car such as the size of the engine, model, and body type. Most of all, if you're a reckless driver, you are going to pay high premiums as you will likely have the most number of accidents than other car owners.