Car Insurance Myths That Lead Drivers to Make Poor Coverage Decisions
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Red cars cost more to insure, your credit score is irrelevant, minimum coverage is always enough — these widely held beliefs often aren't true.
Key Takeaways
- Car color has no effect on your insurance premium — insurers don't track vehicle color.
- Your credit history influences rates in most states, even if you're a safe driver.
- State minimum liability limits often fall far short of covering a serious accident's costs.
- Filing a small claim can raise your premium more than paying out of pocket would have.
- Personal auto insurance typically does not cover vehicles used for rideshare or delivery work.
Why Insurance Myths Are Expensive
Auto insurance is one of the most significant recurring expenses for American drivers, yet policy decisions are often guided by folklore rather than facts. Misunderstanding how coverage actually works can leave you paying for protection you don't need — or worse, discovering you're underprotected after an accident has already happened.
The myths below are among the most persistent. Clearing them up won't tell you exactly what policy to buy — that depends on your vehicle, finances, and state — but it will give you an honest foundation for those decisions. For a plain-language breakdown of every major coverage type, see Auto Insurance Decoded.
Myth
Red cars cost more to insure because insurers see them as higher risk.
Fact
Insurers do not factor in vehicle color when calculating premiums — it simply isn't a rating variable.
This myth has circulated for decades, often tied to the idea that red cars attract speeding tickets or signal aggressive driving. In reality, auto insurers collect specific vehicle data — make, model, trim level, year, engine size, and VIN — none of which includes paint color. What does matter is the vehicle's safety record, repair cost, theft frequency, and how it's used. A red economy sedan and a white one of the same model will carry identical base rates.
Myth
Your credit score has nothing to do with car insurance — only your driving record matters.
Fact
In most U.S. states, insurers are permitted to use a credit-based insurance score as a rating factor, independent of your driving history.
A credit-based insurance score is not identical to the score a lender uses, but it is derived from similar credit report data. Insurers argue that this metric correlates with claims frequency. A handful of states — including California, Hawaii, and Massachusetts — restrict or prohibit its use, but in the majority of states, a lower credit score can raise your premium even if you've never filed a claim. Monitoring your credit report for errors is worthwhile for more reasons than just borrowing.
Myth
State minimum liability coverage is enough protection for most drivers.
Fact
State minimums set a legal floor, not an adequate safety net — many limits haven't kept pace with actual accident costs.
A serious collision involving injuries, multiple vehicles, or property damage can generate costs that dwarf a state's minimum liability requirements. If a court judgment exceeds your policy limits, you are personally responsible for the difference. Drivers often end up underinsured precisely because they assumed legal compliance equaled adequate protection. Higher liability limits typically add relatively little to an annual premium compared to the financial exposure they reduce.
Myth
You should always file a claim — that's what insurance is for.
Fact
Filing a claim for minor damage can trigger a premium increase that costs more over time than simply paying for repairs yourself.
Insurers track claims history and may classify you as higher risk after a filing, even if the incident was minor and you weren't at fault. Before calling your insurer, compare the repair estimate against your deductible and the likely premium impact over the next few years. For small, at-fault incidents — a scraped bumper, a dented door — many drivers find it cheaper to pay out of pocket. Understanding deductible trade-offs is part of the same calculation.
Myth
Your personal auto policy covers you while driving for a rideshare or delivery service.
Fact
Standard personal auto policies typically exclude commercial use — coverage gaps can occur the moment you accept a fare or delivery request.
Most personal policies contain explicit exclusions for vehicles used to carry passengers or goods for hire. Rideshare companies generally provide some coverage during active trips, but the periods between app activation and ride acceptance often fall into a gap where neither the company's policy nor your personal policy applies fully. Drivers doing rideshare or delivery work should speak with their insurer about a rideshare endorsement or a commercial policy add-on to avoid being uninsured at a critical moment.
Myth
Comprehensive coverage pays for everything — no matter what happens to your car.
Fact
Comprehensive covers non-collision losses such as theft, weather, and fire, but it does not cover collision damage or mechanical breakdowns.
The word "comprehensive" sounds all-encompassing, but it's a defined coverage category with specific inclusions and exclusions. Damage from hitting another vehicle or an object requires collision coverage. Engine failure, worn brakes, or transmission problems are mechanical issues that neither comprehensive nor collision addresses — those fall under a separate vehicle service contract if you have one. Liability vs. full coverage explains how these coverages layer together in practice.
Making Smarter Coverage Decisions
Once you strip away the myths, the real variables come into focus. Insurers consider dozens of rating factors — ZIP code, driving history, vehicle make and model, annual mileage, and credit score among them. Understanding what actually drives your premium is more useful than avoiding a red car. What actually determines your car insurance premium walks through those factors in detail.
1 in 8
U.S. drivers estimated to be uninsured
According to the Insurance Research Council, approximately one in eight drivers on American roads carries no auto insurance, raising the stakes for adequate uninsured motorist coverage.
~40%
Of drivers carry only minimum liability
Industry surveys consistently find that a large share of insured drivers hold only their state's minimum liability limits, leaving significant financial exposure in serious accidents.
Minimum coverage requirements exist to protect other people on the road — not to ensure you're made whole. If your liability limits are low and you cause a serious accident, you could face out-of-pocket costs well beyond your policy limits. See how state minimums compare to recommended coverage levels to understand what that gap looks like in dollar terms.
Reviewing your policy at renewal is also worth the time. Life changes — a new vehicle, a move, a teenage driver added to the household — can each shift your coverage needs significantly. Run through the auto insurance renewal checklist before you sign off on another term.
Gaps in Coverage Can Emerge Without Warning
Life changes — switching jobs, moving to a new state, adding a driver, or using your car for a side gig — can quietly invalidate portions of your existing policy. Don't assume your coverage automatically adapts. Review your policy whenever your circumstances change, and notify your insurer proactively. Keeping your policy accurate as your life changes outlines exactly when and how to update your coverage.
This article provides general educational information about auto insurance and is not personalized insurance, financial, or legal advice. Coverage terms, eligibility, and premium factors vary by insurer and by state. Always read your actual policy documents and consult a licensed insurance agent or adviser for guidance specific to your situation.
Author
Autos & Driving Editorial Team
Autos & Driving Editorial Team is the collective byline for our editorial team and contributor network. Articles published under this byline or an editorial pen name are researched, written, and reviewed according to our editorial standards for clarity, consistency, and independence before publication.
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