Myths are a staple of every culture, no matter where you reside. Every society has its own mythology. It has existed for a while. Myths have existed from the dawn of human history. These stories can be found in all facets of life, and the auto insurance sector is no exception. The most recent customer we had believed that the reason her insurance rate was greater was because her car was more expensive. What do you think, readers? Does the price of a car affect the premium, or is that just a myth? In this blog post, we’ll address this fallacy as well as many others. Let’s get going.
1. EXPENSIVE CAR MEANS A HIGHER PREMIUM
Despite what most people believe, a vehicle’s price has no effect on the premium. In reality, the cost of repairing a car has a bigger impact on how much you’ll have to pay the insurance provider. After all, an accident is the only time the insurance company gets involved. It’s interesting to note that some older, less expensive cars are more expensive to insure since they are more expensive to repair.
2. VEHICLE COLOUR
Many car owners believe that the premium will be affected by the colour of their vehicle. For instance, an insurance premium for a red car will be higher than one for a white one. There are other aspects besides these. Please read our article on the effects of outside influences on auto insurance.
3. CREDIT SCORE HAS NO IMPACT ON THE PREMIUM
This is a flat-out false assumption. Almost every insurance provider in the world bases premium calculation on credit score. The majority of individuals are unaware that the credit score can be raised. As a result, if you notice someone with a low credit score paying less for insurance, it probably means that they have made an effort to raise it. Companies only review credit histories going back 5 to 7 years. So, if you chose poorly about 8, 9 years ago, the insurance provider won’t be aware of it.
4. INSURANCE PAYS FOR EVERYTHING
The insurance provider does not cover every expense. The firm will inquire about your contribution to any claims when you purchase auto insurance elsewhere, including the United Arab Emirates. Your agreed-upon sum will be referred to as the insurance excess. Insurance covers the remaining balance. Please see this article for further details about insurance excess. Thus, in the event of an accident, you will be responsible for the excess payment while the insurance company pays the balance.
5. INSURANCE PAYS FULL AMOUNT FOR A TOTALLED OR STOLEN CAR
Consider purchasing a car for AED 30,000. A year later, it is either stolen or totaled in an accident. Do you believe the insurance provider will cover the entire cost of the vehicle? No, is the response. The insurance provider takes into account depreciation, which is the reduction in value brought on by normal wear and tear. As a result, the insurance provider will only pay after taking into account the depreciation amount.
6. TRAFFIC VIOLATIONS INCREASE THE PREMIUM
Does a single ticket for a moving offence affect the premium? Okay, no. Insurance providers are aware that car owners are still people. We’re all capable of making errors. As a result, they won’t take a single traffic infraction into account when calculating the premium. However, you might anticipate an increase in your insurance premiums if the offences happen too frequently.
7. COMPREHENSIVE INSURANCE COVERS EVERYTHING
It is a myth once more. Insurance that covers everything is not comprehensive. It does not cover anything but what is specified in the insurance policy. For instance, the policies of many insurance companies do not include coverage for acts of God. You will need to purchase add-ons if you want defence against occurrences like hail, floods, and other acts of God. Not every business would provide such a supplement.