Key Takeaways
Why Auto Insurance Myths Are Costly
Misconceptions about auto insurance don't just cause confusion — they lead drivers to make coverage decisions based on faulty assumptions, sometimes with serious financial consequences. Believing your minimum policy is sufficient, or that a friend's insurance will cover an accident in your car, can leave you exposed in exactly the moments coverage matters most.
The myths below are among the most widespread. Understanding what's actually true helps you evaluate your own policy with clearer eyes. For a foundational overview of how auto insurance works, this plain-language breakdown of auto insurance covers the essentials.
Common Myths — And What's Actually True
Each of the following pairs a widely held belief with an accurate correction, along with the context that explains why the myth persists.
Myth
Red cars cost more to insure because insurers charge higher premiums for certain colors.
Fact
Vehicle color is not a rating factor. Insurers do not ask about paint color when calculating your premium.
This is one of the most persistent auto insurance myths, but it has no basis in how premiums are actually calculated. Insurers set rates based on factors such as the vehicle's make, model, trim level, engine size, safety ratings, and your driving record — not the color on the exterior. For a deeper look at what genuinely moves your rate, see why your car insurance rate is what it is.
Myth
If a friend borrows my car and has an accident, their insurance will cover the damage.
Fact
In most cases, insurance follows the vehicle — your policy is the primary coverage, not your friend's.
When you give someone permission to drive your car, your auto policy generally responds first if an accident occurs. Your friend's insurance may act as secondary coverage if your limits are exhausted, but the initial claim is typically filed against your policy. This means your deductible applies and the claim may affect your premiums going forward. Occasionally lending your car is usually fine, but think carefully before letting someone drive your vehicle regularly without listing them on your policy.
Myth
Comprehensive coverage means I'm covered for everything — any accident, any situation.
Fact
Comprehensive is a specific coverage type protecting against non-collision events like theft, fire, hail, and falling objects.
The name is misleading. Comprehensive coverage applies to damage caused by events outside of a collision — think weather events, vandalism, hitting an animal, or vehicle theft. If your car is damaged in a collision with another vehicle or an object, that falls under collision coverage, which is a separate component. Many drivers discover this distinction only after filing a claim. For plain-language definitions of these and other policy terms, the auto insurance terminology glossary is a useful starting point.
Myth
My personal auto policy automatically covers me when I drive for a rideshare app.
Fact
Standard personal auto policies typically exclude commercial or rideshare use — a coverage gap can exist while the app is active.
Personal auto insurance is written for personal use. When you're logged into a rideshare platform and transporting passengers for compensation, most standard policies will not cover an accident that occurs during that period. Rideshare companies carry their own commercial policies that engage at certain points during a trip, but gaps can exist — particularly when the app is on but no ride is accepted. Drivers who work for rideshare platforms should ask their insurer about rideshare endorsements or separate commercial coverage.
Myth
Carrying only the state-required minimum coverage is enough protection.
Fact
Minimums satisfy legal requirements but often provide far less financial protection than a serious accident demands.
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Beyond liability limits, many drivers overlook uninsured and underinsured motorist coverage entirely. A significant share of drivers on U.S. roads carry no insurance or insufficient coverage. If one of them hits you, your own medical bills and vehicle repairs could go uncompensated unless you have the right protection in place. Uninsured and underinsured motorist coverage is a layer of protection worth understanding before you assume minimums are sufficient.
Myth
Your credit score has nothing to do with your car insurance premium.
Fact
In most U.S. states, insurers are permitted to use a credit-based insurance score as one of many rating factors.
Research cited by insurers has historically shown a correlation between credit-based insurance scores and the likelihood of filing claims — though the relationship is debated and some states have restricted or prohibited the practice. If you live in a state that allows it, improving your overall credit health may, over time, contribute to a more favorable insurance score. For a full picture of the variables that shape what you pay, see factors that affect your auto insurance premium.
Your Policy May Not Cover Every Driver
Most policies extend coverage to occasional permissive drivers, but frequent borrowers — such as a roommate who regularly uses your vehicle — may need to be listed on your policy. If an unlisted regular driver causes an accident, your insurer may have grounds to reduce or deny the claim. Always review your policy language and consult your insurer when someone regularly operates your vehicle.
This article is for general informational purposes only and does not constitute insurance, legal, or financial advice. Coverage terms, exclusions, and regulations vary by insurer and state. Always read your policy documents carefully and consult a licensed insurance professional for guidance specific to your situation.
What These Myths Have in Common
Most of these misconceptions share a root cause: drivers rarely read their full policy documents, and the coverage language that matters most only becomes visible after something goes wrong. The solution isn't to become an insurance expert — it's to ask your insurer direct questions before a gap becomes a problem.
1 in 8
Drivers estimated to be uninsured on U.S. roads
According to Insurance Research Council estimates, roughly one in eight U.S. motorists carries no auto insurance at all.
49 states
States requiring some form of liability insurance
Nearly every U.S. state mandates minimum liability coverage, though required limits vary significantly by state.
If a term in your policy is unclear, the auto insurance glossary can help decode the language. And if you've never thought carefully about what happens when the other driver has no insurance, uninsured motorist coverage is worth a closer look.