7Myths about MA Auto Insurance

1.  The minimum insurance limits allowed by law are sufficient coverages for you to drive around with.

 This is a dangerous myth. The minimum insurance limits required by law provide a small amount of coverage for others, and has almost no coverage to protect you or your vehicle. Proper coverage limits for today’s litigious society include liability limits at $250,000 per person/$500,000 per accident, $250,000 in property damage, and $25,000 in medical payments. If your vehicle is ten years old or newer then collision with a $500 deductible and comprehensive with a $300 deductible are strongly recommended. Other deductible limits are available. Towing and Labor at a $100 limit and substitute transportation coverage at $30 per day are also recommended.

2.  Red vehicles are more expensive to insure than other vehicle colors.

Vehicle colors have no bearing on insurance costs. Age is also not the main factor when looking at a vehicle’s cost of insurance. Insurance rating is done using symbols which are given to each vehicle as they come off of the manufacturer’s assembly line. The symbol represents how often a particular model is stolen, how often that particular model is involved in an accident, how expensive they are to fix, as well as other factors. Age does play a small factor but it is not uncommon to have a vehicle which is a few years older than another to be more to insure than the newer car or truck.

3.  Insurance companies have to accept your application for insurance.

 Although years ago this was true, once the state government introduced competition into the marketplace it gave insurance companies the authority to deny your request for insurance. That being said, you do still have to carry auto insurance in MA. In order to provide coverage for those drivers most insurance companies do not want to insure, the state implemented the MAIP program. This is an insurance pool that all companies who write auto insurance in MA are a part of. If you are denied coverage by insurers in the private market, you would then go into the MAIP pool, where the next insurance company in line must take your auto insurance application. The MAIP program has its own set of rules and rates. These rates are much higher than the rates you would receive if that same carrier accepted your application for insurance voluntarily.

 4.  If you carry collision and comprehensive coverage, you have full coverage.

The term “full coverage” should be removed from your vocabulary. If you have an accident with another party and they are severely injured, just because you have coverage to repair or replace your vehicle does not mean you are fully covered. If you carry minimum liability limits and the other party’s injuries exceed those limits, then you are not fully covered! This phrase is often thrown around by clients and agents alike. It is a dangerous term as it gives clients a false sense of security. There is no guarantee you will ever be fully covered as insurance coverage limits have a cap, but medical bills as a result of an injury are not capped. You could carry the $250,000/$500,000 in liability coverages that were mentioned earlier in the article but that does not guarantee that the injured party’s bills will be no more than $250,000. If their medical bills exceed that limit then you are on the hook for the unpaid balance.

5.  If you file a claim then your insurance will automatically increase.

This is a common misconception about auto insurance. If you are involved in an accident and you are less than 50% at fault, your policy is not negatively impacted. The only time you will see an increase in your insurance premium after an accident is if you are the at fault party. The premium increase is due to the amount of points assessed to your driving record by the Merit Rating Board, which is run by the state. This is called the Safe Driver Insurance Plan, often referred to as SDIP. All insurance companies who agree to write insurance in MA currently use the SDIP program. This results in a surcharge corresponding to the number of points on your driving record.

 6.  People who do not drive your vehicle but live in your household do not have to be listed on your insurance policy.

Any licensed driver who lives in your home or who customarily operates your vehicle must be listed on your insurance policy as an operator. This is non-negotiable and is written into MA law. You may have a child who is never allowed to touch your vehicle, or maybe they are away at college. These operators must remain on your policy as long as your address is their legal residence. There are ways to avoid paying for these drivers, but removing them from the policy is never an option.

7.  Your insurance premium is tied to your age.

Many people often think that 25 is the magic number in auto insurance. The fact is your age has no bearing on your insurance premiums (except when you turn 65, in which case you get a 25% discount). Insurance rating factors rely on years of driving experience, not the age of the operator. 0-3 years driving experience is the most expensive, and once you enter the 3-6 year driving experience bracket you will see a break in your insurance premium. Not until you have been licensed for more than 6 years will your premium drop significantly. If you get your license at age 25 then you will be rated the same way that a 16 year old would. Now keep in mind where you live, your vehicle, and your driving record are all rating factors as well, so if you have been licensed for 6 years but have had 2 speeding tickets and 3 accidents, your insurance will still be extremely expensive.