1. You can only shop for car insurance when your current policy expires.

Many consumers don’t realize that they aren’t bound to their insurance coverage for the full term (ie – 6/12 months). The insured can cancel at anytime, for any reason.

2. Working with a direct company (i.e. the little green lizard) is always cheaper than going through a local agent.

While it’s true that direct companies save money on costs by not incurring agent commission fees, this does not necessarily mean the savings will be passed on to you. Many direct insurance carriers will use those savings to spend more on marketing their brand and product. Without the benefit of local agents marketing for them, direct carriers may need to spend a bit extra to create awareness for their brand. In addition, pricing algorithms of car insurance policies are extremely dynamic and, as a result, there will be a large range in price for any single individual.

3. If your friend borrows your car, then your vehicle is not covered against damages.

In most cases, this is simply not true. Comprehensive and collision coverage will provide protection against any damages to your vehicle, regardless of the driver. However, if you explicitly excluded this friend from your auto insurance policy, then damages would not be covered.

4. Auto insurance rates automatically go down when you turn 25.

Age is an important variable in pricing models. Like any other variable in the pricing model, age is used to predict the likelihood that the insured will make a claim. While people under 25 are statistically more likely to get into an accident, each company handles the impact of age on the price of the policy differently. There is no hard and fast rule that once you turn 25, the price of your car insurance will decrease. Some carriers may offer a pricing break at 21, 23, or 30. There are a variety of other ways to receive discounts on your policy such as bundling a Homeowners or Renters policy with your auto coverage, paying your premium in full, or even choosing to receive paperless billing. It is important to check with each insurer on discounts you can qualify for when shopping for a new policy.

5. Comprehensive coverage covers theft of your vehicle and all items contained within.

Comprehensive coverage on your auto insurance policy only covers items physically attached to your vehicle. This may include your car stereo or GPS device if it is factory installed. For coverage on items contained in your car such as iPods, clothing, and compact discs you will need Homeowners or Renters coverage.