Uncovering Insurance Myths

Last updated: 11/11/2009 2:41:30 PM

My premium will increase just for filing a claim, won’t it? And my deductible doesn’t apply if I hit a deer, right? Not exactly. We asked the insurance professionals here at WEA Trust Member Benefits to help dispel some of the most commonly held insurance myths.

MYTH: My premium will increase just for filing a claim.

Have you ever been reluctant to file a claim because you were afraid your premium would increase?

Each insurance company has its own practice when it comes to increasing premiums because of claims. Some insurance companies may increase your premium by certain percentages for claims that you make which are over a certain dollar limit. At WEA Trust Member Benefits, your premiums are affected only by at-fault accidents.

"The only time you really need to worry about filing a claim and seeing your premium rise is when you’re at fault," explains Chris Farrens, a Claims Representative at WEA Trust Member Benefits.

MYTH: I am 10% at fault just for being in an accident.

"This is a very common misconception we hear," notes Farrens. You are never given a certain percentage at fault just for being in an accident.

If the circumstances surrounding an accident make it clear that one person was responsible for the damage, that person will be found 100% at fault. If, however, liability is not entirely clear or if there is shared fault, then the insurance companies involved will determine the relative percentages of fault of the parties involved.

MYTH: My deductible does not apply if I hit a deer.

Colliding with an animal, such as a deer, is covered under the comprehensive—not collision—portion of your auto insurance policy. Under almost all circumstances when a claim is made to this part of your policy, the deductible will apply.

Confused? Comprehensive insurance coverage protects you against damage done to your vehicle by forces you cannot control (fire, theft, vandalism, and "acts of God" such as severe weather). A collision with a deer (or other animal) is considered to be an "act of God," and therefore is covered under comprehensive insurance. But if a driver runs into a tree, for instance, while trying to avoid a deer, it is considered collision.

"Although you will almost always have to pay your deductible with a comprehensive claim, no one is considered ‘at fault,’ meaning your rate will not increase," explains Farrens.

MYTH: My neighbor’s tree fell on my house. His insurance will cover the damage.

If your neighbor’s tree falls and damages your property, generally speaking, it is your—not your neighbor’s—insurance policy that pays for the damage.

The major exception to this rule is the case of negligence on your neighbor’s part. If the tree was dead or diseased and the neighbor knew or should have known about it, your neighbor could be legally liable for the damages.

MYTH: If a friend has an accident with my car, that friend’s insurance is responsible for the damages.

Your insurance will cover damage to your vehicle if you have comprehensive or collision coverage, regardless of who is driving your car. If the person driving your car, with your permission, has an at-fault accident, you (and your insurance) will be responsible for any property damage or bodily injury caused by the accident.

"If you lend your car, you lend your insurance," explains Farrens. "You should understand that if the permissive driver has an at-fault accident and your insurance company pays, your premiums will be affected." The vehicle owner’s insurance is always considered primary, but the driver’s insurance will be involved only if the owner’s insurance is insufficient to cover all the damage.

MYTH: Red cars are more expensive to insure.

Color is not a factor used to calculate car insurance rates. Roughly 25% of drivers surveyed by Progressive Insurance believe car color is a factor in determining insurance rates.

"We don’t even ask what color your car is when you get a quote from us," says Kelly Behnke, a Personal Insurance Consultant at WEA Trust Member Benefits.

Factors that do matter are the vehicle’s year, make, model, body type, and engine size, as well as information about the driver.

MYTH: The new car I bought is automatically covered under my existing policy.

While it is true that a new vehicle you purchase will automatically be covered under your auto policy, there are requirements for this coverage. All auto policies require you to notify the company of the purchase within a set time frame. "We give our members temporary coverage for 30 days after the vehicle is purchased," explains Farrens. "If you fail to notify us of the purchase of the new car within 30 days of purchase and have an accident on, for example, the 31st day, there is no coverage."

MYTH: Personal belongings stolen out of my car are covered through my auto insurance.

Personal property is insured through your homeowners or renters insurance policy, not your auto insurance.

"Our homeowners insurance covers personal property anywhere in the world up to the personal property limit shown on your declaration page, subject to your deductible," explains Behnke.

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