When planning to purchase auto insurance, it is absolutely vital that you understand the factors that affect your premiums and coverage so you can lower your insurance costs and save money. But how do you differentiate between facts and myths?

With the number of urban myths about auto insurance on the rise, it is no surprise that many drivers end up being misled into purchasing auto insurance that is wrong for them. By clearing up the myths below, you will be more informed and make better decisions when purchasing auto insurance.

Insuring a red car costs more

Many car owners believe it would cost more to insure a red car, but this concept couldn't be further from the truth. The reality is that the color of your car has no impact on your insurance premiums. The notion of red cars costing more to insure could be because many drivers associate flamboyant colors with aggressive or fast driving.

When determining your premiums, insurers look at your car's likelihood of theft, your overall safety record, and cost of repairs. Other factors such as the make and model of the car, its engine size, age, and body type will also partly factor into the cost of auto insurance.

Buying from a dedicated car insurance agent is best

Many car owners trust that they will get the cheapest rates on their auto insurance if they purchase from a dedicated agent working for an insurance carrier. However, the best way to get the best deal isn't to depend on a dedicated agent, but rather to go for an independent agent working with multiple highly rated insurers.

A dedicated agent may not be at liberty to disclose rates offered by competitor insurance companies, and will most likely earn commission if he gets you to purchase a policy from his company. Therefore, by trusting such an agent, you won't be getting a fair comparison of what other companies are offering, and you could end up paying more. An independent agent will help you compare premiums from different insurers, so you can pick the best deal around.

Your auto insurance will cover your loan in full

It is a common myth that your auto insurance company will cover your car loan in full in case your car is totaled. However, the truth is that in most cases, you will have to pay out-of-pocket for part of the loan costs.

This is because your auto insurance typically only covers the 'fair market value' of your car. This is usually the original market value of the car, less depreciation. What your insurer pays will thus be less than your car loan amount, and you will be responsible for covering the difference.

To get professional help with buying car insurance, contact a company such as Budget Bi-Rite Insurance Agency.