Common Car Insurance Myths

Common car insurance myths

There is a lot of incorrect information floating around about car insurance these days. Some of it goes back a  number of years while some of it has emerged with new technology. Where ever the information came from, it can cost you money (through increased premiums or lack of insurance coverage) if you are making decisions based on faulty information. So let's clear up some of the common car insurance myths once and for all.

1. The color of your car affects your insurance prices. NOT TRUE! Auto insurance companies base their rates on the safety features of a vehicle, the costs for repairs and other factors such as likelihood of theft. They also use driver information to determine rates, but they do not base rates on the color of the car. Most insurance companies don't even ask for the color of your car. Certain Makes and models generate more claims than others and therefor have higher insurance rates, but color is not one of the factors.

2. If I let someone borrow my car, they're responsible for any damage if they have an accident. NOT TRUE! In most situations, if you let someone borrow your car, your car insurance is going to extend to the person driving the car. In other words, car insurance typically follow the car, not the driver. So, if you let your friend borrow your car and they crash it into a tree, it will be your insurance company (and your deductible) paying for the claim! However, if your insurance gets maxed out, your friend's policy can be accessed for the additional costs.

3. My insurance company can cancel my policy or raise my rates at any time. NOT TRUE! In most states, insurance companies can only cancel your policy or raise your rates at the policy renewal (unless you are making changes to your policy that increase premiums such as buying a new car). Even if you have a couple of accidents, you will most likely not see the changes to your premium until the next renewal.

4. The laptop stolen from my car is covered under my auto insurance. NOT TRUE! Personal property (such as laptops) are not a part of your car and therefor not covered under your car insurance policy. All personal items are actually covered under your property insurance policy, like you home or renters insurance. Unless something is physically attached and a permanent part of the car, there is no coverage provided under your car insurance policy. Your home insurance, on the other hand, extends some coverage to items that are in your car or any where else outside of the home.

These are just a few of the common myths about car insurance. If you base your insurance decisions on these or other myths, you may find yourself not buying the proper coverage or buying coverage you don't necessarily need. Talk to a local, professional agent - like Robert Edgin, 719-685-8585 - about your personal situation and get the facts about car insurance.

Renting A Car On Vacation - Should You Buy The Rental Insurance?

Hooray, it's vacation time! Time to get away and enjoy some well deserved down time. You've made all of the arrangements - booked the flights and the hotel, reserved your rental car, arranged for a pet sitter - and now it's time to get out of town.

Off you go, getting to your destination was a breeze and now the last thing to do is sign the rental car paper work and then the rental car company hits you with the big question, "Are you going to buy the rental car insurance for a rediculiously expensive price (my words, not theirs) or risk your entire financial life (my words agani) by declining coverage?". Here's what you need to know about insurance to cover the rental car.

Does Your Car Insurance Extend To Rental Cars?
You'll need to check with your local, professional agent for answers specific to your policy, but in general, YES, your car insurance coverage will extend to a rental car. If you have good liability limits, comprehensive and collision on your policy than in most cases you will have the same coverage apply to a rental car that you are using for personal use. If you do NOT have comprehensive and collision on your auto insurance policy, you will NOT have it for the rental car either. So, full coverage on your car equals full coverage on the rental car.

What Is NOT Covered When Renting A Car?
Same disclaimer applies here, you'll need to check your specific policy but in general the loss of use is NOT covered by your personal insurance if you are in a rental car. Loss of use covers the amount of money the rental car company is losing by not being able to rent out a crashed car while it is being repaired or replaced. Here's an easy math example: You rent a car for $25 per day but crash it. It needs to be repaired for 10 days x $25 per day = $250 in loss of use. Your insurance policy will (most likely) not cover the $250 which means you will be responsible for paying it.

Is the loss of use coverage worth buying the rental car insurance? That depends on the math. If you are renting a car for 7 days and the insurance costs are an extra $22 per day that equals $152 in extra costs to cover the possible $250 in the example of 10 days of loss of use. However, if you're renting a car for 1 day, that's only $22 extra to cover the possible $250. Is it worth it? That is an answer you'll have to answer for yourself, but here's one more factor to consider; the rental car doesn't always charge for loss of use. If they have 10 more cars on the lot that could be rented instead of the one you crashed, do they suffer a loss of use? If they do not suffer a loss of use, will they try to recover the $250?

Two More BIG Considerations!
If you are a client of a company that offers some type of client reward for being claim free (like the 25% ANPAC refunds each year for being claim free*) you may want to consider paying for the rental car insurance so that any claim would be paid by the rental car insurance policy and NOT affect your reward. The chances of you crashing a rental car while on vacation are probably no greater than crashing your own car, but at least you would not lost your Cashback* reward if you are involved in an accident.

Most rental car insurance does NOT have a deductible. If you have a $1,000 deductible on your personal insurance policy, you would be responsible for the same $1,000 deductible if you crashed the rental car and your personal insurance was paying for the damages.

So, you've got some options when it comes to paying the extr costs associated with the rental car insurance. At least you know what you're facing the next time the rental car rep throws the paper work in front of you and stares at you intensely while you ponder whether or not the extra insurance is right for your personal situation.

Don't forget to get connected with me on facebook: www.facebook.com/myinsuranceguys. You'll get more great info and updates and have some fun with contests too!

Are Colorado Earthquakes Covered In My Home Insurance?

Earthquake and Colorado are not usually words you hear in the same sentence, but the recent 5.3 quake in southern Colorado is a reminder that earthquakes can - and do - happen. Fortunately this quake only caused minor damage, but if an earthquake hits close to your home, the biggest damage will probably be to your wallet!

Homeowners insurance policies don't cover earthquakes, but you can generally buy a rider to add the coverage to your policy. And in areas that rarely experience major earthquakes, like Colorado, the coverage is relatively inexpensive. You can add a rider to your home insurance policy for around $150 per year to make sure your insurance company would help you repair or rebuild after an earthquake.

When can you - and can't you - buy earthquake insurance? Most insurance companies will not allow you to add the earthquake coverage to your policy within 30 days of an earthquake that measures 5.0 or higher if you live within 100 miles of the epicenter. The residents of Trinidad would have to wait an entire month from the date of the quake in order to get coverage, which means they're on their own for any damage from after shocks or additional quakes.

What about getting help from the state? Colorado officials say they have no money to help earthquake victims in southern Colorado. Department of Local Affairs spokeswoman Linda Rice says the state is providing technical assistance, including geological analysis, aerial photography and water quality testing but there is not money available to help with the costs of damage.

No insurance and no help from the state means you're on your own! Although Colorado earthquakes are rarely felt, they are happening at a surprising pace. A complete history of Colorado earthquakes can be found at http://earthquake.usgs.gov/earthquakes/states/colorado/history.php. Colorado has had a 6.6 quake and a 4 year period that recorded over 1300 quakes. If you find your property damaged, expect to pay for all repairs out of your own pocket.

Things To Know BEFORE You Rent An RV Or Camper

Make sure that RV is covered before you hit the open road!

Summer is not quite over yet, and if you're thinking about renting a camper or RV for one last warm weather getaway, there are a few insurance things you should know before heading out for that family vacation.

RV's and campers are NOT covered automatically! While most insurance companies will extend coverage to a rental car (check your policy to find out if your policy does), the same cannot be said for motorhomes and campers. They're in a completely different class than that Ford Taurus you rented from the airport on your last vacation and they need their own insurance in place BEFORE you get behind the wheel!

As you might imagine, the RV rental companies are more than happy to sell you some insurance to cover that big fancy rig you're driving off in at a pretty hefty daily rate. It's a great money maker for the rental companies and can come in very handy if you crash their RV. But did you know there is another, much more affordable, option available to you? Some insurance companies (like American National) can add a special endorsement to your auto policy to cover that motorhome or camper for up to 15 days! What's the price, you ask? A one time charge of $15!

For $15, ANPAC will extend comprehensive coverage ($100 deductible) for non-accident related claims, as well as collision coverage ($250 deductible) for any accidents that may happen. Plus, it even comes with $50 towing and emergency road side service in case you need it!

The big advice here is to make sure ANY vehicle that you rent or borrow has some form of insurance coverage. You can buy it from your insurance company or the rental company. If you don't, you may find yourself at the bad end of a really big repair bill!

You Owe $534,000

Did you write your check yet?


I find it hard to believe, but it's true. I owe $534,000, and so does my wife. So do you...and so does your spouse. What do all of us owe for? It's our individual share of the US national debt, and believe it or not, our balance due is getting bigger!


It was kept out of the news for years, but as the bickering in Washington has turned it's focus towards fiscal responsibility, more and more articles are popping up in the news about out country's budget problems and how much it would cost each of us for our share to fix things.


Below are excerpts from an article I came across written by Jeff Clark that does a good job of summing things up:

"You owe $534,000. That's your share of the national debt – your cost of fulfilling the government's promises. Please send in a check right away. We have bills to pay.

On Tuesday (June 7th), the headline on front page of USA Today screamed "U.S. owes $62 trillion." It's a number so big, so gargantuan, it defies description. I've never seen 62 trillion of anything – be it dollars, marbles, or grains of sand on a beach.

So when analysts, economists, or newsletter editors talk about the enormity of the national debt and warn of the eventual consequences, they're often declared kooks, extremists, or "Chicken Littles."

But now it's right there on the front page of one of America's most widely read newspapers. The size of the problem is becoming mainstream, and it begs the question… "How the heck are we going to pay for this?"

The simple answer is… we're not.

Some promises are going to be broken. There's no other way around it. And many people are going to be let down.

And as with any massive economic disruption, there are investment implications. The easiest and most obvious: U.S. Treasury bonds are headed lower.

We've covered this topic plenty of times. The basic premise is one of supply and demand. The U.S. needs to issue ever-increasing amounts of new debt to fund its insatiable spending habits. So the supply of new bonds is increasing at a rapid pace.

Meanwhile, the investment demand for Treasury securities is drying up. Foreign governments aren't lining up to buy U.S. bonds like they used to. Individual savers are reluctant to accept 3% interest per year on 10-year notes when real inflation is running at twice that rate. Indeed, the only certain buyer for new Treasury issues is the Treasury itself – which buys its own bonds through the quantitative easing (QE) programs.

That buying will dry up when QE2 comes to an end.

In an environment of increasing supply and shrinking demand, there is only one direction for bond prices to go… down. It's obvious. It's logical. Yet, so far this year, it has been wrong. Interest rates have been falling steadily since January, and bond prices have been rising.

That's how markets work sometimes. They don't always reward the obvious and logical trades right away. Think about the internet bubble in 1999 and 2000. Companies with no sales and no earnings were trading at multibillion-dollar valuations. It was nuts and everybody with a brain knew it. But the market didn't care. It didn't matter how crazy things got. Internet stocks were a one-way upside bet and going against that momentum was financial suicide.

That is… until the "realization" stage set in.

The crash in internet stocks happened virtually overnight. It was as if the market snapped its fingers and investors collectively awoke from their trance.

I suspect the Treasury bond market is set up for a similar sort of awakening. And the snap of the fingers that may get things going is Tuesday's headline inUSA Today.

If you still own Treasury bonds, it's time to sell. The markets have given you a gift. Bond prices aren't quite back up to the levels they were at when I first urged you to get out, but they're at the best prices we've seen this year.

Take advantage of it.

Jeff Clarck"