Last Updated on December 11, 2025

You might think you know how car insurance works — but the industry is full of half-truths, outdated “rules,” and myths that vary by state and insurer.

Are red cars more expensive to insure? Does gender really impact premiums? Does “full coverage” mean everything is covered? Below are 22 of the most common car insurance myths — and what’s actually true today.

Key Takeaways

• Many “car insurance rules” depend on your state and policy details—so myths can sound true while still being wrong for your situation.
• “Full coverage” isn’t a standardized product; it usually means you added collision and comprehensive, but it still has exclusions and limits.
• Minimum legal insurance can leave you seriously underinsured—especially with today’s high medical and repair costs.
• Comparing quotes with the same limits and deductibles is the best way to separate myths from what your policy will actually pay.

The Most Common Auto Insurance Myths

1. Red Cars Are More Expensive to Insure

In general, this is a myth. Insurers typically rate a vehicle by factors like make/model, trim, safety features, repair costs, theft risk, and your driving profile — not paint color. Many insurers don’t even ask about the color. Learn more: does the color of your car affect your insurance rates?

2. Thieves Are More Likely to Steal a Newer Vehicle

Not necessarily. Theft trends change year to year based on popularity, security vulnerabilities, and parts demand. Some of the most-stolen vehicles in recent years have included common sedans and high-volume models — not just brand-new luxury cars. Theft is less about “new” and more about “easy to steal” and “easy to resell or part out.”

3. Car Insurance Always Covers My Stolen Car

This is a common misconception. Car insurance will cover a stolen vehicle only if you carry comprehensive coverage (usually part of “full coverage”). Comprehensive coverage is optional in most states and generally covers theft, vandalism, hail, fire, and other non-collision losses. Without comprehensive, you typically won’t be paid for theft.

4. Car Insurance Always Covers Collision Damage to My Own Vehicle

Also not always true. Your vehicle repairs after a crash are only covered if you have collision coverage (or if the other driver’s insurer accepts fault and pays). If you’re at fault and don’t carry collision, you’ll likely be paying out of pocket.

5. I’ll Lose My Loyalty Discount by Switching Insurers, So It’s Not Worth It

Loyalty discounts can be real — but they aren’t always your best deal. Many drivers save money by switching insurers, even after factoring in any loyalty discount they’d lose. The only way to know is to compare quotes for similar coverage limits.

6. I Can’t Cancel My Auto Insurance Policy Mid-Year

You can usually switch mid-policy. If you find a better deal, you can cancel your current policy and switch quickly. You may pay a cancelation fee depending on the insurer and state, and you’re often refunded any unused prepaid premium (prorated or short-rate, depending on policy terms).

7. No-Fault Insurance Means I’m Never At Fault

No-fault is widely misunderstood. In many no-fault states, your own insurer pays certain injuries regardless of fault — but fault can still matter for property damage and lawsuits, and it can still impact rates. Read more: no-fault insurance systems.

8. Men Pay More than Women for Car Insurance

This is sometimes true, but it’s not a universal rule. In many states, young male drivers often pay more than young female drivers because they’re statistically more likely to file claims. But differences can shrink with age, vary by insurer, and don’t apply everywhere. Costs also depend heavily on your record, coverage choices, and location (and in some states, gender can’t be used at all).

9. Gender Always Impacts Car Insurance Premiums

Not always. Some states restrict insurers from using gender as a rating factor. In places where it’s allowed, insurers may consider gender — but even then, it’s only one of many variables.

10. All Car Insurance Companies Charge Pretty Much the Same Rates

Definitely a myth. Pricing varies widely. Some companies compete hard on price and show up as cheap auto insurance companies, while others focus on service, claims handling, or niche markets (including drivers who want higher limits, add-ons, or umbrella coverage). Always compare like-for-like coverage.

11. If a Friend Causes an Accident While Driving My Car, My Premiums Will Not Increase

Usually false. In many cases, your insurance follows the car. If you lend your vehicle with permission, your policy is often primary, and the claim can affect your record and rates — even if you weren’t driving.

12. If My Garage Burns Down, My Homeowners Insurance Covers Vehicle Damage

Homeowners insurance can cover damage to the garage structure, but it generally does not cover vehicle damage. If your garage burns down with your car inside, the vehicle portion typically goes through your auto policy — usually comprehensive coverage.

13. Insurers Mostly Look at Driving History to Calculate Premiums

Driving history plays a big role, but it’s far from the only factor. Insurers may also consider your location, age/experience, vehicle details, annual mileage, prior insurance history, and in many states, credit-based insurance score (where allowed).

14. Insurance Rates Always Drop with Age

Rates often drop as drivers gain experience — but they don’t drop forever. As you get older (and keep a clean record), premiums often fall into your 30s–50s, then may rise again in later years. Drivers in their 70s and beyond can see increases (example here). Age is just one of many rate factors.

15. I Don’t Need Any More Than the Minimum Legally Required Car Insurance

Minimum limits can be dangerously low. A serious crash can create massive medical costs and liability exposure — and insurance only pays up to your limits. Beyond that, you’re on the hook. Even a “moderate” injury claim can reach six figures in medical bills, lost wages, and legal costs. See how injuries can add up: car insurance pays for medical bills after an accident.

16. My ZIP Code Has No Impact on Car Insurance Premiums

ZIP code can matter a lot. Insurers use location to estimate theft risk, crash frequency, repair costs, traffic density, weather losses, and more. Learn why: why does your ZIP code matter so much for auto insurance rates?

17. Speeding Tickets Don’t Impact Car Insurance Premiums

Often false. One ticket may or may not have a huge impact, but tickets can raise rates — especially repeat violations or higher speeds over the limit. Insurers price risk, and tickets are a risk signal.

18. 2-Door Cars Are More Expensive to Insure than 4-Door Cars

Sometimes, but not always. It depends on the vehicle’s claim history, safety features, theft rates, repair costs, and how the model is typically driven. Some models cost more to insure regardless of the number of doors.

19. My Insurer Can Cancel My Policy at Any Time

Usually false. Most states limit when and how insurers can cancel mid-term. Common “good cause” reasons include non-payment and misrepresentation or fraud. Multiple crashes and violations may lead to non-renewal at the end of the term, and repeated incidents can increase the risk that your insurer drops you after too many losses (more here).

20. Expensive Cars Cost More to Insure

Often true — but not guaranteed. Vehicle cost matters, but so do safety ratings, theft risk, and repair costs. Some pricier vehicles can have competitive premiums if they’re safer and cheaper to repair than you’d expect. For high-end vehicles, coverage needs can differ too: do you need special coverage for a high-end or luxury vehicle?

21. Anything in My Car is Protected by Car Insurance

Usually false. Auto insurance typically covers the car, not the personal items inside it. If a laptop or phone is stolen from your vehicle, it’s often a homeowners or renters claim under personal property (subject to deductible and limits), not an auto claim.

22. Insurers Can’t See My Driving or Claims History from a Previous Insurer

They usually can. Many insurers share claim information, and claims history is commonly tracked through databases like CLUE. You can often review your own record too: how can I see my CLUE report online?

FAQs on Car Insurance Myths

Final Word

Car insurance is complicated — and many myths are based on outdated rules, one-off experiences, or assumptions that don’t apply in every state.

When in doubt, read your declarations page, verify coverage in writing, and compare quotes with the same limits so you know you’re making an apples-to-apples decision.