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Don't buy into any of these.

Key points

  • Car insurance is an important thing to have, no matter the age or state of your vehicle.
  • It's important to understand what goes into determining car insurance rates and how these policies work.
  • Don't assume that a safer car will cost less to insure, a red car will cost more, or that you won't have to pay your deductible if another driver is found at fault in an accident. 

If you're going to own a car, you'll need to factor the cost of auto insurance into your budget. But the amount you pay for coverage, and the amount you pay under your policy, will hinge on different factors.

Now, there's a lot of misinformation out there when it comes to auto insurance. But buying into it could mean underestimating your costs and running into issues as a result. With that in mind, here are a few myths about car insurance you really shouldn't believe.

1. A car with added safety features will be cheaper to insure

Many newer cars these days come with safety features that are designed to help drivers avoid accidents and stay focused. Some cars, for example, have lane departure warnings, where your car will beep if you veer into another lane. Others have brake warnings that will sound if your vehicle senses you're getting too close to another on the road. And many vehicles come equipped with backup cameras that make it easier to park and back up without accidentally bumping into another car.

These features may be helpful in their own right. But believe it or not, they won't automatically result in lower auto insurance premiums. The reason? Safety features like these can also be costly to fix. And that may be reflected in your car insurance premium rates.

2. Your credit score doesn't come into play when you apply for auto insurance

It makes sense your credit score would be a factor in your ability to snag a competitive rate on a mortgage or personal loan, since you're asking to borrow money. But when you apply for auto insurance, you're not asking for a lump sum of cash -- you're securing coverage for your vehicle. As such, you'd think your credit score wouldn't have an impact on your premium rates. But you'd be wrong.

Your credit score is an indication of how well you manage your bills. As such, insurance companies will often use it to determine how well you'll manage your vehicle -- even though the two aren't necessarily related.

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3. The color of your car matters

You'll often hear that red cars are more expensive to insure than cars with a more muted finish. That's really not true. While a red car might stand out more on a roadway than a white or gray vehicle, at the end of the day, the type of car you have and your driving history will have more of an impact on what your auto insurance premiums look like.

4. You won't be responsible for your deductible if another party is at fault for an accident

Let's say your car is parked in a legitimate spot and another car rams into you. Clearly, in that scenario, you aren't at fault. But that doesn't mean you won't have to shell out your deductible in the course of getting your vehicle fixed.

What will often happen in this scenario is that you'll pay your deductible, your insurance company will seek to get reimbursed from the insurance company of the person who hit your car, and then your deductible will be paid back to you. But that could take some time, so it's a good idea to keep money in savings in case you have to shell out cash for a deductible upfront. 

Auto insurance can be a big expense, so it's important to know how it works and what goes into your premiums. And that means steering clear of these potentially dangerous myths.

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About the Author

Maurie Backman writes about current events affecting small businesses for The Ascent and The Motley Fool.

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