The most widespread car insurance myths are flat wrong. Red cars don't cost more to insure, your credit score can add over $749 a year to your premium according to Insurify's 2026 rate analysis, and your personal auto policy excludes Uber driving. Drivers who shop around save a median of $461 per year, Consumer Reports found.
- 46% of US drivers wrongly believe red cars cost more to insure, but insurers don't use color as a rating factor.
- Drivers with poor credit pay an average of $2,602 a year for full coverage versus $1,853 for excellent credit, a 40% gap per Insurify's 2026 data.
- The average auto insurance claim now costs roughly $13,000, up about 10% from 2024, which makes state-minimum liability dangerous.
- Rideshare work invalidates most personal policies; Uber's contingent coverage carries a $1,000 deductible and Lyft's runs $2,500.
- Loyalty discounts of 5% to 20% rarely offset renewal rate hikes, so compare quotes every 6 to 12 months.
Bad advice about car insurance spreads faster than good advice. A 2020 survey of 2,000 licensed drivers found that 46% of Americans still believe red cars cost more to insure, a claim no major insurer has supported in decades. Bad myths cost real money: a study by Consumer Reports on Washington state policyholders showed that some insurers gave loyal 15-year customers zero discount at renewal.
Before your next renewal, read through the ten myths below. Each one pairs the myth with the documented truth and a data point you can verify. If you're shopping for a policy, our complete guide to buying car insurance walks through the full process once you've sorted fact from fiction.
Myth 1: Red Cars Cost More to Insure
The truth: Color has no effect on your premium. Major insurers like Progressive, Allstate, and GEICO don't ask for your car's color on a quote application, and the Insurance Information Institute confirms that rating factors include make, model, engine size, body type, sticker price, repair cost, theft frequency, and your own driving record. Law enforcement data actually shows that white cars, not red ones, are the most ticketed vehicle color nationwide.
Why does the myth stick? Sports cars attract red buyers and also attract speeding tickets, which pushes rates higher for the vehicle class. The car is the risk, per Progressive's underwriting explainer, so a red Civic and a white Civic of the same year and trim quote at identical rates.
Myth 2: "Full Coverage" Means Everything Is Covered
The truth: No carrier sells a policy called "full coverage." The phrase loosely refers to liability plus collision plus comprehensive, and it still leaves big gaps. Roadside assistance, rental reimbursement, custom equipment, gap insurance, mechanical breakdown, and rideshare driving are all separate add-ons. Plymouth Rock's consumer guide lists at least six common exclusions that catch drivers off guard after a loss.
Ask your agent for a declarations page and read line by line. Our breakdown of what full coverage actually means spells out which perils are covered and which require an endorsement, and our guide to common car insurance exclusions lists the situations where even a full-coverage policy pays nothing.
Myth 3: Older Cars Don't Need Full Coverage
The truth: Age alone doesn't decide the answer. The Insurance Information Institute's rule of thumb says to drop collision and comprehensive when your vehicle's market value falls below 10 times the annual premium for those coverages. A 2008 Honda Accord worth $6,500 with $600 a year in collision and comprehensive still passes that test, but a rust-bucket 2001 Corolla valued at $1,800 probably doesn't. Our breakdown of when to drop collision and comprehensive runs the math for common vehicle values.
Pull your vehicle's trade-in value from Kelley Blue Book, then divide it by your collision and comprehensive premium. If the ratio is under 10, call your agent to quote liability-only and save the difference.
Myth 4: Your Credit Doesn't Affect Your Rate
The truth: It does, almost everywhere. FICO estimates that 95% of auto insurers use a credit-based insurance score when setting premiums. Insurify's 2026 rate analysis found that drivers with poor credit pay an average of $2,602 a year for full coverage while drivers with excellent credit pay $1,853, a 40% gap. Bankrate puts the spread even wider at 105% for the worst-credit tier.
Four states restrict the practice: California, Hawaii, Massachusetts, and Michigan either ban it or cap it. Everywhere else, pulling your credit score up 100 points can shave hundreds off your renewal, often more than a safe-driver discount would. Our deep dive on credit score and car insurance explains how insurance scores differ from the FICO number lenders see.
Myth 5: My Health Insurance Covers Car Accident Injuries
The truth: Partially. Your employer health plan will pay for hospital care after a crash, but it won't touch lost wages, pain and suffering, copays, deductibles, or passenger injuries. In 12 no-fault states (Florida, Michigan, New York, New Jersey, Pennsylvania, and others), personal injury protection (PIP) is required on every auto policy for exactly this reason.
Many health plans also include subrogation clauses, which means the insurer will come after any at-fault driver's auto settlement to recover what they paid. MedPay, an optional add-on that costs $5 to $15 a month, pays deductibles and copays the auto carrier won't. Skipping MedPay to save $120 a year can leave you exposed to thousands in hospital bills after a moderate crash.
Myth 6: Filing a Small Claim Is Always Worth It
The truth: Often it's the opposite. A Bankrate analysis found that filing an at-fault claim raises rates by an average of 49%, and Progressive reports that those surcharges stay on your policy for three to five years. On an $1,800-a-year premium, a 49% hike compounds to roughly $2,646 in added cost over three years.
Filing a claim also erases safe-driver and claim-free discounts that many carriers price at 5% to 20%. Run the math before you call: if the repair is $900 and your deductible is $500, paying out of pocket avoids three years of surcharges.
Myth 7: State-Minimum Coverage Is Enough
The truth: It rarely is. State minimums often sit at 25/50/25 or lower, which means $25,000 per person and $50,000 per accident for bodily injury. The average auto insurance claim now runs about $13,000 per ValuePenguin's 2026 rate report, and a serious multi-car crash with hospitalizations can easily clear $100,000. Any damages above your limit come straight from your savings, home equity, or future wages.
The Insurance Information Institute recommends 100/300/100 as a realistic floor for drivers with assets to protect. Our guide to how much car insurance you actually need walks through the liability math by asset level and household size, and our deeper explainer on liability car insurance limits shows what each number in 25/50/25 really buys you.
Myth 8: My Personal Auto Policy Covers Uber and Lyft Driving
The truth: It almost never does. Nearly every personal auto policy contains a business-use exclusion, which kicks in the second you turn on the Uber or Lyft app. Rideshare coverage splits into three periods: app off, app on and waiting for a match, and en route with a passenger. Progressive's consumer guide explains that Uber's contingent insurance carries a $1,000 deductible during Period 2 and Lyft's hits $2,500.
Progressive, Allstate, and GEICO sell rideshare endorsements that bolt onto a personal policy for roughly $10 to $30 a month, which closes the Period 1 gap cleanly. Drive without one and your carrier can deny a claim, drop your policy at renewal, and refer the loss to the rideshare company for recovery. Our report on the true cost of rideshare insurance for gig drivers has carrier-by-carrier pricing for 2026.
Myth 9: Comprehensive Covers All Flood Damage Automatically
The truth: Comprehensive typically pays for storm-surge and flash-flood damage to your vehicle, but several exclusions apply. American Family and Amica both note that negligence claims get denied, including a window left open during a rainstorm or a slow leak from deferred maintenance. Personal property inside the car (laptops, car seats, golf clubs) falls under homeowners or renters insurance instead.
Carriers block new comprehensive coverage 24 to 48 hours before a named storm approaches. If you live in a hurricane or flash-flood zone, buy comprehensive now at roughly $17 a month rather than after the next National Weather Service watch.
Myth 10: Loyalty Always Beats Shopping Around
The truth: Loyalty often costs you money. The Zebra and Policygenius put loyalty discounts at 5% to 20%, but Kiplinger's reporting on price optimization shows that carriers raise base rates 15% to 25% at renewal then apply the loyalty credit on top, leaving customers worse off. A Consumer Reports investigation in Washington state revealed that nearly half of insurers surveyed gave zero loyalty discount to 15-year customers.
Drivers who compare quotes and switch save a median of $461 per year, Consumer Reports found, which equals roughly a third of the average policy cost. Set a calendar reminder every 6 to 12 months, pull three quotes, and switch if the gap exceeds $200 a year. Our full analysis of car insurance loyalty discounts covers which carriers reward tenure and which punish it.
| Credit Tier | Avg. Annual Full Coverage | Monthly Equivalent | vs. Excellent Credit |
|---|---|---|---|
| Excellent (800+) | $1,853 | $154 | Baseline |
| Good (700-799) | $2,089 | $174 | +13% |
| Average (600-699) | $2,341 | $195 | +26% |
| Poor (below 600) | $2,602 | $217 | +40% |
Source: Insurify 2026 auto insurance rate analysis, national averages for a 40-year-old driver with a clean record and full coverage (100/300/100 liability plus collision and comprehensive). Rates exclude California, Hawaii, Massachusetts, and Michigan, which restrict credit-based rating.
One bad myth can cost you thousands. Believing state minimums are "enough" exposes you to a $13,000 average claim on $25,000 of bodily injury coverage, leaving every dollar above that limit to come from your pocket.
How to Spot a Bad Car Insurance Tip
Check the source before you act on advice. Tips from Reddit, TikTok, or a coworker's cousin usually lack state context, vehicle context, or current data. Government bodies like the NAIC, state Departments of Insurance, and the III publish free consumer guides, and Bankrate, Insurify, ValuePenguin, and Consumer Reports run annual rate studies on real quote data.
Ask your agent three questions at renewal: what rating factors changed on my policy, what discounts am I missing, and what does a 100/300/100 liability quote look like versus my current limits. Our guide to the best time to shop for car insurance covers when to run comparison quotes and how often to re-shop.
Frequently Asked Questions
No major US insurer uses vehicle color as a rating factor. Progressive, Allstate, GEICO, and State Farm all rate on make, model, trim, engine size, body type, and sticker price. A 2020 survey of 2,000 drivers found 46% still believe the red-car myth even though insurers haven't used color data in decades.
Bankrate's claims analysis found that an at-fault accident raises rates by an average of 49%, and Progressive reports those surcharges stick for three to five years. On a $1,800 annual premium, a 49% increase compounds to roughly $2,646 in added cost over three years, often far more than the original claim payout.
Rarely. State minimums like 25/50/25 cap bodily injury at $25,000 per person and $50,000 per accident, yet ValuePenguin puts the 2026 average claim at roughly $13,000 and serious multi-car crashes regularly clear $100,000. The III recommends at least 100/300/100 for drivers with any assets to protect, plus uninsured-motorist coverage where legal.
- Insurance Information Institute — 8 Auto Insurance Myths
- Bankrate — Car Insurance Rates by Credit Score (2026)
- Insurify — Average Car Insurance Rates (March 2026)
- ValuePenguin — State of Auto Insurance 2026
- Progressive — Do Red Cars Cost More to Insure?
- Progressive — How Accidents Impact Insurance Rates
- Progressive — Rideshare Insurance Coverage
- Kiplinger — Why Loyalty Doesn't Pay in Car Insurance
- Policygenius — Car Insurance Loyalty Discount Savings
- American Family Insurance — Car Insurance and Flood Damage