You need auto insurance FAQ, because you can’t afford to be walking (or driving) around uninformed these days. Buying into all the misconceptions out there about car insurance could cost you hundreds of dollars.

Remember what happens when you assume...

Auto Insurance FAQ:Assumption #1:

"I can’t get the red one. It’ll raise my insurance rates.”

The color of your car has nothing to do with your insurance rates. You need to forget the color and worry about the car’s year, make, model, body type, and engine size, along with your credit history, and driving record.

Assumption #2:

"Sure you can borrow my car, buddy, your car insurance will cover damages if you crash it.”

Ouch! This one could cost you big bucks. Your car, your tab. If your policy extends coverage to those operating your vehicle with your permission, it will be primarily your insurance that will foot the bill for any injuries or damage your guest driver causes. If your buddy makes a huge mess and the injuries or damages go beyond your policy limits then your friend's insurance may cover the excess.

The bottom line is this: Even if you weren’t anywhere near the crash, you'll likely still carry that accident on your record and your premium could easily go up because of it.

Assumption #3:

"My credit score has nothing to do with my car insurance.”

Insurance companies strongly disagree. Studies have shown that people with good credit are less risky drivers. And so they get lower rates.

Assumption #4:

"A guy under 25 is getting the shaft on car insurance rates over everyone else”

Not exactly. It's true that guys under 25 years old usually pay more for car insurance than women under 25. But they definitely don’t pay more than teenagers and seniors (unless of course you have a terrible driving record in that Ferrari.)

Assumption #5:

"No-fault insurance means it's not my fault."

NOT! Totally the opposite when it comes to the end result. No-fault insurance actually means that your insurance company pays for your injuries regardless of who's at fault.

Assumption #6

"My new car is automatically covered by my existing insurance."

Don’t assume. Most insurance policies require that the policyholder notify the car insurance company or agent within a specified number of days after buying a car so be sure to double check.

Assumption #7

"Collision covers me for theft, hail and deer accidents – if you get hit, it’s a collision."

Collision insurance only covers damage to your car resulting from an upset with another vehicle or object (like a fence post), not incidents involving vandalism, hail, animal accidents and fires. You need to purchase both collision and comprehensive coverage in order to fully protect your vehicle from all of these situations.

Assumption #8:

"My personal auto insurance covers both the personal and business use of my car."

That’s a maybe. If you use your personal car for business purposes such as driving clients, going to and from meetings or hauling business equipment, then you really should extend your coverage to include the business use.

Assumption #9:

"I've never had or been involved in a car accident, so I don't need automobile insurance."

Are you kidding me? Not only are you opening yourself up to serious consequences should you have an accident and be found at fault, you are also ignoring the fact that YOU could be hit by an uninsured driver, leaving you to pick up the tab out of your own pocket. Not smart.

Auto insurance FAQ can be very valuable before you take the wheel. Dare I fail to mention that it’s ILLEGAL to be driving around without car insurance? In some states you may actually have your car towed away, and your license suspended if you get caught driving without proof of current insurance.