Auto insurance myths that cost California’s drivers money

With auto insurance rates climbing nearly 19% year over year, drivers are paying more than ever. The average American now spends $2,189 each year on coverage. That’s why it’s so important to understand what’s true and what’s a myth about car insurance. Now countless drivers continue to make costly decisions based on widespread myths and misconceptions that directly impact their wallets.

These myths aren’t just harmless misunderstandings. They’re financial pitfalls that can leave you overpaying for coverage, underinsured in critical situations, or facing unexpected out-of-pocket expenses when you need protection most. Let’s debunk the most expensive auto insurance myths and show you how to save money while maintaining the coverage you actually need.

Myth #1: red cars cost more to insure

One of the  most enduring beliefs in auto insurance is that car color affects the cost of insurance. This misconception has persisted for decades, causing drivers to avoid their preferred color based on false information.

The truth: insurance companies never ask about your car’s paint when calculating premiums. Your vehicle’s color has zero impact on insurance costs. What matters are risk-based factors: make, model, year, engine size, safety features, theft likelihood, and repair costs.

Car color does not directly affect the cost of your car insurance premium. A red Toyota Camry and a white Camry will be priced the same. Insurers base rates on factors like the car’s make, model, engine size, safety features, and repair costs. So, a high-performance sports car in any color will carry higher premiums due to increased accident risk and expensive repairs.

Myth #2: your auto insurance follows you and the car

Many drivers assume their personal auto insurance automatically covers them when driving rental cars, borrowed vehicles, or a friend’s car.

The reality: auto insurance primarily follows the vehicle, not the driver. If you lend your car to a friend who causes an accident, your policy is the one on the hook. Similarly, coverage for rental vehicles varies dramatically across insurers.

According to the Insurance Information Institute, some policies provide limited rental coverage, while others exclude it entirely.

What this means for you:

• Before lending your vehicle, understand claims will impact your record.
• Check if your credit card offers rental car coverage before declining protection.
• Review your policy’s “permissive use” provisions to see who can legally drive your car.
• Never assume you’re covered when borrowing someone else’s vehicle.

Myth #3: older cars don’t need full coverage

Many drivers drop comprehensive and collision coverage once a vehicle ages, but age alone isn’t the right metric.

A 10-year-old truck could still be worth $15,000, while a heavily used 5-year-old sedan may only be worth $7,000. The smarter approach is the 10% rule: if your annual comp + collision premiums exceed 10% of your vehicle’s value, consider dropping them.

Before doing so, ask yourself:

• Could you replace the car out of pocket?
• Do you still owe money on the vehicle (lenders require full coverage)?
• What’s your accident history and risk tolerance?
• Do you have backup transportation if the car is totaled?

Myth #4: you only need the state minimum liability coverage

Many drivers assume that meeting the state’s minimum liability requirements is enough. In California, the minimum coverage is now:

• Bodily Injury Liability: $30,000 per accident / $15,000 per person
• Property Damage Liability: $15,000 per accident

These limits were updated under Senate Bill 1107 (Protect California Drivers Act) to better reflect the rising costs of medical care and vehicle repairs.

Even with these updated minimums, a serious accident can leave you exposed. For example, a single emergency room visit can easily exceed $15,000, and total accident costs—including hospital bills, rehabilitation, and property damage—can quickly climb into the tens or even hundreds of thousands of dollars.

Recommended coverage for better protection:

Coverage Type	California Minimum	Recommended	Potential Gap
Bodily Injury per person	$30,000	$100,000	$85,000+
Bodily Injury per accident	$60,000	$300,000	$270,000+
Property Damage	$15,000	$50,000	$35,000+

For drivers with personal assets to protect, an umbrella liability policy can provide extra security beyond standard limits. Relying solely on the state minimum may leave you paying out-of-pocket for costs that far exceed your coverage.

Myth #5: filing any claim will skyrocket your rates

Fear of higher premiums leads many drivers to pay out of pocket unnecessarily. But not all claims affect rates equally.

• At-fault collision: average premium increase 31–45%.
• Comprehensive claims (hail, theft, hitting a deer): average increase 0–10%.
• Some insurers offer accident forgiveness for your first at-fault crash.

If repair costs are only slightly above your deductible (within $1,000), paying yourself may be smarter. For major damages, filing a claim is the right choice.

Myth #6: bundling = automatic savings

“Bundle and save” is a common marketing line, but bundling isn’t always the cheapest option. Discounts range from 5–25%, but sometimes separate policies at different companies beat bundled rates.

Smart strategy:

1. Get standalone quotes for home and auto separately.
2. Compare with bundled rates from your current insurer.
3. Compare with bundles from competitors.
4. Weigh total cost plus coverage quality and service.

Bundling is often smart—but only after running the numbers.

Myth #7: it costs more to insure your car as you get older

Actually, California drivers often see the opposite effect. Car insurance usually gets cheaper as you get older because the likelihood of you getting into an accident and making a claim gets lower. Mature drivers (especially those age 55 and older) may qualify for special discounts if they complete an approved defensive driving or accident prevention course (such as through AAA or AARP).

Retirees who no longer commute daily can also save money because insurers consider mileage one of the top three pricing factors in California. If you’ve recently retired, updating your annual mileage with your insurer can lower your premium.

Myth #8: your credit affects your insurance rate

This is true in many states, but not in California. State law prohibits insurers from using credit scores to set premiums. Instead, California requires auto insurance pricing to be based primarily on:

• your driving record,
• your annual mileage,
• and your years of driving experience.

This makes the system more transparent, but it also means Californians must focus on safe driving habits and accurate mileage reporting to keep costs down.

Myth #9: military service pays more for insurance

Quite the opposite. Active-duty military members, veterans, and in some cases their families often qualify for significant discounts from insurers. Providers like USAA, GEICO, and others offer special rates for military service.

In California, where more than 150,000 active-duty service members are stationed, this discount can add up to hundreds in annual savings. Always ask your insurer about military or veteran benefits if you’re eligible.

Myth #10: personal auto insurance covers business use of your car

If you’re self-employed and regularly use your personal vehicle for business (whether delivering goods, transporting clients, or ridesharing) your personal policy may not protect you. California insurers require a commercial auto policy for vehicles used primarily for business purposes.

Even if you’re just making side income with rideshare apps, you’ll need to check coverage gaps. Companies like Uber and Lyft provide limited protection, but you may still need rideshare-specific endorsements to avoid being uninsured between fares.

Take control of your car insurance costs

Debunking myths isn’t just trivia, it’s financial protection. With premiums climbing across the country, every driver should know how insurance truly works.

Key takeaways:

• Car color doesn’t matter; your driving record and vehicle type do.
• Minimum coverage is rarely enough; consider higher limits.
• “Comprehensive” isn’t all-inclusive; know your policy.
• Credit score, car value, and uninsured drivers all affect your risk.
• Bundling may help, but always compare.

The cheapest policy isn’t always the best value, and the priciest isn’t always worth it. The right balance is smart coverage at a reasonable cost, customized for your needs.

Trust your car to Kavana Insurance

At Kavana Insurance, we believe in cutting through the noise. Our mission is to empower drivers with transparent information and personalized coverage options. We help you navigate the complexities of auto insurance without the myths, ensuring you get the protection you need at rates you can actually afford.

Contact our team today to review your policy and discover how much you could save by replacing myths with facts.