Insurance is something that nearly everyone purchases. Whether you own a car or carry health insurance through your company, chances are you’ve had experience purchasing insurance. However, insurance can oftentimes be a very misunderstood and complicated concept and product.
It’s important to educate yourself on the different types of insurance and coverages available, but it can sometimes be difficult to distinguish the truth from myths. Here are a few common myths insurance professionals hear from consumers:
Myth 1: I should buy insurance coverage for my house based on its real estate market value.
Reality: Buy coverage based on a home’s cost to reconstruct (materials and labor).
Myth 2: Red cars cost more to insure because they get pulled over for speeding more.
Reality: Car color doesn’t affect insurance rates.
Myth 3: If I cause a crash with extensive damages to others, my auto insurance company can cancel me immediately.
Reality: If an insurer wants to drop a customer due to claims, it generally has to wait until the policy period is up.
Myth 4: Small cars are the cheapest to insure.
Reality: Mid-size SUVs and minivans are generally the cheapest to insure. Small cars are not, often because they’re chosen by more inexperienced drivers who tend to make claims, and because passengers incur more expensive injury claims.
Myth 5: The Affordable Care Act (also called Obamacare) allows health insurance companies to base rates on medical conditions such as high blood pressure, heart disease and cancer.
Reality: It’s just the opposite – the Affordable Care Act prohibits health insurers from basing rates on pre-existing conditions.
Myth 6: Comprehensive auto insurance covers everything and anything.
Reality: Comprehensive coverage is tragically misnamed. It covers only narrow portions of possible problems, including car theft, storm damage, animal collisions and vandalism.
Myth 7: Thieves prefer to steal new cars.
Reality: It’s more lucrative to steal old cars and sell them for parts.
Myth 8: If my friend borrows my car and crashes it, their insurance will pay for damage.
Reality: You and your insurance are on the hook when someone else drives your car.
Myth 9: The Affordable Care Act (also called Obamacare) requires me to take the health insurance plan offered by my employer.
Reality: The Affordable Care Act requires almost all Americans to buy health insurance but doesn’t say where they must get it.
Myth 10: Out-of-state speeding tickets can’t follow you home.
Reality: Oh yes they can.
This list exposes only some of the common misunderstandings consumers have about their insurance. If you find yourself uncertain about your insurance costs, coverages, or needs, please contact me and I will help you make the most educated choice to best protect yourself, your family, and your assets.
Source: The Insurance Journal
Oscar G. Castillo is an Independent Insurance Advisor, proud to service the greater Rockford area – including: Belvidere, Marengo, Loves Park, Machesney Park, Freeport, Rockton, Roscoe, South Beloit, and Beloit (Northern Illinois and Southern Wisconsin). Offering insurance quotes for: Home, Auto, SR-22, Renters, Life, and Small Business /Commercial Insurance.