You've been eyeing that red car in the dealership parking lot, and you finally purchased it. Congrats! Now you're ready to get your car insurance rates. But as you're looking through your car insurance quote, you start to wonder if red cars cost more to insure. Do they?
Your car insurance rates vary based on your individual circumstances, such as driving history, age, gender and location. Because many factors can impact your rates, you may want to spend time researching and shopping around for insurance quotes that work best for you. Then compare quotes from several providers, so you're getting the most affordable option and not spending more than you need to.
As many people may believe, there are myths about comprehensive insurance policies that are not true. Here are five common car insurance myths to keep in mind as you're shopping and comparing car insurance quotes.
1. Red Cars Cost More to Insure
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Red cars do not cost more to insure. Whether your car is red, silver, black or yellow, the truth is that insurers don't take your car's color into account when determining your insurance rate since providers consider your car's made, model and year.
The price of insurance premiums depends on factors unrelated to car color. They focus on the likelihood you will file a claim. These are a few factors insurers consider:
- The make, model and year of your car
- Your driving record
- The number of miles you’ve driven
- Your location
- Your age
- Your gender
- Your insurance history
Sports cars and electric car models can be much more expensive to insure than the average car, but it's rarely due to color. Instead, it's most likely the car itself that you may see a slight increase in your premiums. Insurers take into consideration the type of car you drive.
In addition, owning a red car shouldn't influence the number of tickets you get or increase the likelihood of accidents. But if you do have a high number of tickets and accidents, you may see an increase in your insurance rates.
2. Older Drivers Pay More to Insure Vehicles
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Insurers take into consideration your age when determining your insurance rates. For older drivers around the age of 50, you may pay the cheapest car insurance rates, while senior drivers in their 60s and 70s may see a higher rate.
But senior citizens may be eligible for discounts that ultimately lead to significant savings, and find the cheapest car insurance for seniors. Many insurers extend discounts to those who complete courses, which cover safe-driving techniques and road rules, among other topics.
Younger and inexperienced drivers may also experience higher premiums than drivers in their 20s, 30s and 40s and have been driving longer.
Demographics may also impact insurance rates, either directly or indirectly. For example, MoneyGeek’s study found that residents in neighborhoods with fewer white residents paid more for car insurance, and young, male drivers are likely to pay higher prices than female drivers.
3. Buying the Minimum Amount of Liability Insurance Will Save You Money
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Most states require a minimum amount of auto liability protection to cover any injuries and property damage if you cause an accident. Full coverage car insurance costs more than basic liability car insurance.
But going for the cheapest option may cost you more in the long run due to steep medical bills or damages you may be required to pay in the event of an accident if you are at fault. It’s important to check what’s covered by your insurance so you're prepared.
Check your state's requirements and determine how much liability coverage you will need. You can also ask your provider if you qualify for any discounts to help you save money.
An umbrella liability policy can also help you if you're involved in an accident. An umbrella policy gives you additional liability protection if you exceed your coverage limits. Talk with your provider to see what type of extended coverage you may need.
4. Your Credit Score Doesn’t Matter
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Credit scores differ from insurance scores. Insurance scores predict insurance losses, with lower scores increasing the likelihood a claim will be filed.
Credit scores can predict credit delinquency and serve as an indicator of your personal finance management skills. Just as a credit score can affect your ability to secure a mortgage or rent an apartment, it can also impact your car insurance rates.
California, Hawaii and Massachusetts are the only states that do not consider credit scores when determining car insurance rates. Drivers with poor credit scores could pay more than $1,000 more per year for their car insurance.
If you are worried about your credit score, you can improve it. In fact, the average U.S. FICO score increased to 706 in April 2019 and has continued to increase over the years, according to the Fair Isaac Corp. (FICO).
5. Expensive Vehicles Increase Rates
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While newer, more expensive cars can cost more to insure than older, less pricey vehicles, rates can vary.
For example, people who get sports cars may enjoy going fast — and get more tickets and accidents. Therefore, a sports car that costs $25,000 can cost more to insure than a minivan that costs $40,000.
A vehicle’s “loss history report” gives insurers useful information to evaluate when underwriting a policy. The loss history shows any insurance loss associated with a car, including the amount paid on claims made on similar vehicle models in addition to similar claims that have been rejected.
Whatever insurance you buy, always drive the speed limit, drive defensively and drive safely. If you do that, you will be sure to have lower insurance rates — no matter what. But keep in mind that the type of car you drive can make a difference on your rates.
About the Author
Erik Deckers is a professional blogger and ghostwriter who is the co-author of Branding Yourself, No Bullshit Social Media and The Owned Media Doctrine. He has been writing about business and money issues since 2009.
- National Association of Insurance Commissioners. "Auto Insurance Database Report." Accessed May 19, 2021.
- Fair Isaac Corp. (FICO). "Average U.S. FICO Score Ticks Up to 706." Accessed August 1, 2021.