Five car insurance myths that could hit you in the wallet

Everybody knows that red cars cost more to insure and that thieves target high-end new cars. Right?*

Actually, wrong. Car insurance myths like those can inaccurately influence consumers' buying decisions and cause costly misunderstandings about what their policies do and don't cover.

These five common auto insurance myths might surprise you:

1. I'm automatically covered if my car is stolen.
   
   FACT: Unless you've specifically selected "Comprehensive" coverage, theft isn't covered by your auto policy. (Neither is vandalism or damage from fire or hail.) 
    
2. My loan will be paid off if my car is totaled.
   
   FACT: Your insurance settlement is based on the market value of your car at the time of the accident (which includes depreciation), minus your deductible – not what you owe on your loan. Your lender will hold you responsible for any difference. If your car is newer than three years old, you'll want to ask about an Auto Loan Endorsement, which would fill the gap between your totaled vehicle's market value and the remaining balance due on your loan. 
    
3. My auto insurance covers items stolen from my car.
   
   FACT: Car insurance (Comprehensive coverage) typically pays only for items attached to the vehicle – not personal belongings left inside. You'd need to file a claim under your homeowners or renter insurance for the stolen items.
   
   
4. If I slide into another car on an icy street, I'm not at fault.
   
   FACT: While you don't control the weather, you do control whether or not you decide to drive in icy conditions. Ice, snow, fog, rain and darkness may contribute to an accident, but they don't absolve drivers of responsibility.
    
5. If my friend gets into an accident while driving my car, her insurance will cover it.
   
   FACT: Responsibility is more likely to be shared between available insurers. Insurance policies are detailed contracts and include specific clauses that address coverage when others are driving with the owner's permission. Some are more restrictive than others and cover only the people named on the policy, or they specify which company should "go first."

To sort it all out, the first step is to call both insurance companies – PEMCO and your friend's – because the accident will become part of both of your insurance records.

Do you have questions about your coverage? Call your local PEMCO agent or 1-800-GO-PEMCO for a policy review.

*We don't even ask about the color of your car. And as for car thieves, they often target older, common models with the intent to dismantle and sell them for parts.