Car Insurance Myths That Could Be Costing Your Family Money

This myth is remarkably persistent, but color simply doesn't appear on any standard insurance rating formula used by US insurers. What actually drives your premium includes the car's safety record, repair costs, theft rates for that model, and your personal driving history. A red sports car costs more to insure than a red minivan — but only because of the vehicle type, not the color. When shopping, focus your energy on those real factors rather than the shade of your vehicle.

Counterintuitive as it sounds, insurers have historically found that drivers who seek minimal, third-party-only cover can be statistically higher-risk, which pushes those premiums up. Meanwhile, comprehensive policyholders tend to be assessed as lower-risk on average. The gap varies by insurer and individual circumstance, so always compare both levels of cover when getting quotes. Assuming third-party is automatically the budget option without checking can leave money on the table — or leave your own vehicle unprotected unnecessarily.

The mechanics of no-claims discounts (NCDs) vary by insurer, but a single claim rarely zeroes your bonus outright. Many policies reduce it by two or three years — still a financial hit, but not a complete reset. No-claims protection add-ons let you make a limited number of claims without affecting your discount, though you should weigh the cost of that add-on against the potential saving. Read your policy terms carefully so you understand exactly how claims are handled before one occurs, not after.

Young, inexperienced drivers are statistically higher-risk, so adding them to a policy typically increases cost. However, the size of that increase depends on the insurer, the vehicle, and the young driver's own record. Conversely, adding a more experienced, low-risk adult driver to a policy can reduce the overall premium in some cases. One important caution: never list an experienced driver as the primary driver when a younger person is the main user — this is called fronting and constitutes insurance fraud, which can void a claim entirely.

Most major US insurers use a credit-based insurance score — a distinct calculation from your standard credit score, but derived from similar underlying credit data — as part of their rating process. Research by the Federal Trade Commission has found that these scores correlate with the likelihood of filing claims. A handful of states, including California, Hawaii, and Massachusetts, restrict or prohibit this practice. If you live in a state where it applies, improving your broader financial health over time may gradually influence your insurance costs, though insurers weight many factors together.

Before accepting every add-on offered at renewal, check what you already have. Roadside assistance may be included in a manufacturer's warranty, a separate auto club membership, or even a credit card benefit. Paying for it through your insurer as well means you're covering the same risk twice. Review each add-on individually against what you already own. That said, some add-ons — like legal expenses cover — can provide genuine value for families, so the goal is an informed choice rather than a blanket rejection of all extras. See our guide to cutting insurance costs without cutting cover for a fuller breakdown of how to assess each option.