Myths about car insurance

Top 5 myths about car insurance

,, In Romania, 1 from 10 cars has CASCO insurance. And this is because the minimum mandatory car insurance is the RCA, which is extremely expensive, as drivers say, but very cheap in the words of insurers. [...] more and more problems causes the fact that 1 from 10 cars that are traveling on the roads in the country is without a valid car insurance. And it seems that their number is growing. (Poll: How much you need a RCA, 14 June 2011, 4Tuning.ro).

 

This survey was realized in order to raise an alarm signal on Romanian attitudes regarding the car insurance. In Romania, car insurances can be divided according to their legal regulations in: mandatory or optional. Liability insurance (RCA) is a compulsory car insurance which includes the costs to repair the damaged vehicle of a third party, or bodily injury of passengers, resulting from traffic collisions. On the other hand, CASCO is an insurance that protects the vehicle from theft or any damage it may suffer, whether or not the driver is responsible for that.


The survey results highlight the fact that the RCA, even if it is mandatory, does not determine certain persons to ensure their costs for property damage resulting from an accident. What is even more interesting is that the money invested in the car insurance is not the only reason in determining the consumer behavior. In this case, which could be the adjacent reasons that make most of the people to not conclude a motor insurance, either mandatory or optional?

 

Most often, it is revealed that a person's decision to purchase a car insurance (as in the case of life insurance and house insurance) is influenced by some information from close sources such as family, relatives or acquaintances. Sometimes, this information has an unfounded character and it is based on what we call myths. In the following we will display the most common myths about car insurances.

 

1. Insurance companiescan charge insurance premiums based only on their policy parameters

There are people who believe that insurers can charge fees and can determine the amount of auto insurance premiums based only on their own policy. This opinion is so false because there are government entities that monitor the modalities of creating the car insurance products and services - Financial Supervisory Authority (ASF). In fact, insurance and reinsurance companies and also the brokerage companies set their premiums and the values insured of the car policies in accordance with the ASF and under its express monitoring.

 

2. Liability insurance is sufficient for the personal car

This myth takes over the comparison between the compulsory auto insurance and the optional one. The RCA, respectively CASCO are two complementary forms of insurance. Liability insurance, by definition, provides the costs for all vehicle owners to cover damages to third parties, and CASCO completes this by insuring their own car in case of an accident. Thus, when purchasing a car is advisable that in addition to the compulsory motor insurance to get also the optional car insurance in order to protect your investment.

 

3. The cheapest way of protection your car is the compulsory insurance

In Romania, the RCA only covers third-party damage, but what is protecting the car of the driver is the optional insurance. For example, in case of an unfortunate event - road accident where both cars involved were damaged, the RCA will cover only the damage of the third person’s vehicle and the costs for repairing your own vehicle will be from your own pocket. Thus, according to the evaluation of the costs, your car repair can cost more than the payment of the premiums for the mandatory insurance and the optional one. For this reason, the RCA is not the cheapest way to insure the costs of a car accident.

 

4. Old cars are cheaper to insure than the new ones

In Romania, the price is an important factor in the purchase of a motor insurance. According to the longevity of a car, the cost of the insurance premiums is calculated based on a number of features. The age, annual mileage and the profile of the driver are factors that influence the premiums of the car policies. What is observed is that, according to this myth, people who have older cars tend to purchase only the compulsory insurance to protect third parties, which for now seems to be a profitable way (cheap). But when an accident with total damage on your own car occurs, buying a new car exceeds way more the payment of the premiums of a CASCO insurance.

 

5. The color of the car influences the premium of a motor insurance

There are manypeople who believe that the color aspect of a car is an important factor in setting auto insurance premiums. In some international surveys was noticed that more than 44% of young respondents considered that red cars have higher insurance premiums, while 23% of the elderly say that color range is an important factor in determining payment of insurance premiums. This idea can be generated through the association of the image of the red sports cars, which are known for the power of their engines and the exclusive prices. But reality differs from this assumption: the insurance companies and insurance brokerage companies do not take into consideration the vehicle color when elaborating the financial analysis. They are interested in the model of the car, the year of fabrication, the size and the power of the engine, etc...

 

These myths have an important influence in a negative way on the mentality of Romanians when choosing the car insurance. The company Kunden Broker de Asigurare SRL tried to expose to the public which are the most important realities when purchasing a motor insurance, either compulsory or voluntary. The owner of a car in Romania must aim to a type of insurance which is effective in terms of costs and benefits and to include the coverage that fits to everyone’s needs.