There was a time before information was available on command to the device of our choice when there was a fair amount of effort required to find out if something was true or just an urban myth. That time is frequently referred to as the good old days by anyone born prior to 1980. However, even in the age of information, there are a wide variety of myths and misunderstandings that have shown themselves to be extremely tenacious in their will to survive, as well as some new ones that are learning fast the art of survival against the odds and in the face of facts.
Assuming we all know that Zuckerberg isn’t giving away stock to anyone, no retailer is giving away $500 gift cards, and no picture of you belongs to you once it hits the internet no matter what legal mumbo jumbo you have posted on your twitter status…….here are a few myths about insurance that we can now assume that we all know the truth about.
Myth 1: Homes, cabins, townhomes, businesses or other property should be insured to their market value………….FALSE! Property is insured to replacement value, or what it would cost to clear out the debris and rebuild it exactly the way it was in the event something were to happen. Market value includes the land while replacement cost is just concerned with the actual building. Replacement value also isn’t as concerned with location……a house that costs $400K to rebuild is the same whether it’s a brand new home in Eden Prairie or a 110 year old home in south Minneapolis with intricate hand carved wood work.
Myth 2: Red cars cost more to insure because they get pulled over more…….FALSE! Car color has no impact on rates. Insurance companies adjust your rates based on the number of tickets you get and what those tickets are for. If you get more because you drive a certain type or color of car that draws attention to the fact that you are doing something illegal, then your costs will be higher. The guy in the red Lamborghini who drives the speed limit and doesn’t text and drive will not pay any more than the guy in the blue Lamborghini who also obeys the law.
Myth 3: If I get in an accident or get a major ticket, my insurance company can cancel me immediately………FALSE! In most cases, insurance companies have to wait until renewal to drop you by giving you notice that you are not going to be renewed. In certain circumstances you can be cancelled mid policy term, but here in Minnesota any cancellation or non-renewal requires cause and typically 60 days’ notice.
Myth 4: Comprehensive auto insurance covers everything that happens to your car…………FALSE! Comprehensive coverage is unfortunately misnamed. Like all coverages, the kinds of damage covered by comprehensive are pretty well spelled out and limited to things that are completely unavoidable like being hit while parked on the street in front of your house, or being broken into in the parking lot at the gym, or hitting a deer on the way up north.
Myth 5: Thieves target newer cars to steal and re-sell…….FALSE! While certain unique vehicles may end up like the 50 cars that Nic Cage stole in Gone in Sixty Seconds, most car thieves make their money by stealing older cars that can be stripped and sold as individual parts. This means cars that were the most popular and had the most years of interchangeable parts. Think 2003 Toyota’s, Honda’s, and F150’s.
Myth 6: If my friend borrows my car and gets in an accident, his insurance will cover the damages and liability……..FALSE! Insurance follows the car, so anything that happens in your car is your……and your insurance company’s ………responsibility. Choose your friends wisely, and select high limits.
Myth 7: Out of state speeding tickets don’t count against you……..FALSE! While some states law enforcement refuses to talk to others and some states don’t report in to the insurance database, a speeding ticket in Wisconsin is still a speeding ticket, and will likely catch up to you even if it takes a few extra months.
Myth 8: No Fault insurance means that even if the accident wasn’t your fault you still end up paying and the jerk who caused it gets off without being held responsible……….FALSE! No Fault is an unfortunate popular term for personal injury protection, which just means that no matter who’s fault it is, if you get hurt in an accident, your insurance will pay the first $20K in medical costs. It was created so that someone without health insurance can get a ride to the hospital in the ambulance and get basic treatment and have the bill paid without having to wait for the investigation to figure out whose fault the accident was. Prior to this, people would wait to find out who’s fault it was and not pay the ambulance bill, and they’d be sued by the hospital for not paying on a timely basis.
Myth 9: My laptop and wedding ring that were stolen out of the center console while I was working out at the gym will be covered by my auto insurance……..FALSE! Personal property is covered by your homeowner or renters insurance, not by your auto policy. Your car insurance will fix the window they broke, but replacing your valuables will require a claim on your property policy.
Myth 10: I have to get coverage on my new car before I can drive it home…….FALSE! If you have insurance on your current car and you go to buy a new one, you are covered up to 10 days at the same level your current car is insured to. So no need to track your agent down at home the day after Thanksgiving to get a new ID card, you’re covered till Monday morning when you can call them with the VIN number.
This post was written by Aaron Nicklay, Agent with Farmer’s Insurance. For more information on this topic and more and how Aaron can help protect your business, email him at anicklay@farmersagent.com or call (952) 229-5155.
