Don't let the myths about car insurance drive you off the road

It's leading to more people than ever illegally driving without insurance, risking having their car seized by police and crushed or sold if it is not claimed within 14 days. Uninsured drivers also face a £200 fixed penalty, six penalty points and £150 car recovery charges. And they will only be able to get their car back if they can prove they have bought valid insurance.

With some 160 people killed every year by uninsured drivers, police are cracking down on them. By using Automatic Number Plate Recognition (ANPR) technology, which is linked to information on the Motor Insurance Database (MID) – the central record of 34 million insured vehicles in the UK – police are able to detect and seize uninsured vehicles at the roadside.

In fact police report that 180,000 vehicles were seized last year, taking the total to more than 600,000 since laws were introduced in 2005. Even more good news is the fact that last year 194,000 people were convicted in court for uninsured driving – that is one conviction every three minutes.

But the insurance industry says that some people fail to get adequate cover because they're put off by some of the insurance myths floating around. Some are ridiculous, while others sound plausible. Here we examine the most common misconceptions people have about car insurance.

Red cars cost more to insure

Many people believe that insurers automatically associate red with youth and aggressive driving but there really is no truth in that. In fact the AA says that there is no statistical evidence at all that a red car will increase your insurance premium.

Insurers use a variety of factors to calculate the cost of cover – such as the make and model of the car and its age and engine size, as well as taking into account your driving record and location. They don't take into account the colour of the car.

I will be covered if my car is stolen or vandalised

You will be covered, but only if you have fully-comprehensive insurance. Some third-party, fire and theft insurances do offer an element of cover for stolen vehicles or damage caused to a stolen vehicle that is subsequently recovered, but not all. You need to examine the policy's small print to discover what level of cover you have.

The police did not charge me so my no-claims is unaffected

Sorry, this is not always true. The police may not have been called, or have not deemed you criminally responsible for an accident, but it's your insurer which has the final decision as to whether your no-claims discount is affected or not. The accident will go on your permanent record and could become a factor on your rating.

If I get a speeding ticket my insurance rates will go up

Not necessarily. A first minor speeding ticket may not affect your insurance rate. However, the speed you were travelling will be noted and – if excessive – could lead to higher premiums. A second or third ticket will suggest you're a bit of a racer and premiums could start to rise steeply.

Anyone can drive my car as I have comprehensive cover

Not true. Insurers cover the driver, not the vehicle so anyone who drives your car must have their own comprehensive insurance in their own name or they will be uninsured. Even then, they will only be covered on a third-party basis so if anything happens to your car while they are driving it, you will not be covered for the damage.

My vehicle is worth what I paid for it

If your car is damaged beyond repair, vandalised or stolen, your insurer will only pay what it costs to replace it with a similar model that is on the market today, not what you paid for it. It doesn't matter if you splashed out £10,000 for it, your insurance only pays for a replacement vehicle, not a new one.

Car insurance policyholders told to check registration plates

Car insurance policyholders have been reminded about the legislation surrounding number plates and how they are displayed.

Drivers in Essex might find they are pulled over for showing alternative fonts, spacing or colours instead of the regulation figures that are bold on a plain background.

Adam Pipe, casualty reduction manager for Essex Police said: "The main problem with misrepresented number plates is that we cannot quickly identify a car or its owner if it is stolen or used in crime."

Indeed, he added that the issue is compounded by the fact that automatic number plate recognition technology does not work when a non-regulation item is in place.

Motorists could also do well to fit anti-tamper screws to their registration plates, as criminals have been known to fit them to stolen cars to change their identity - a practice which sees them get away with speeding fines and driving off from petrol stations without paying.

Car insurance costs pushed up by administration fees

Motorists are paying more for car insurance as a result of rising administration fees, according to Defaqto.

The independent financial research company found providers are frequently adding these fees to their products and that the scale of administration fees imposed on consumers has also risen dramatically since 2004.

In the past six years, the percentage of car insurance policies charging setup fees has increased from two per cent to seven per cent, while the number adding adjustment fees has shot up from 17.3 per cent to 67.1 per cent.

Mike Powell, insight analyst for general insurance at Defaqto, said: "There has been a noticeable and significant trend for motor insurance policies to charge administration fees for features that were in many cases previously standard services. Many consumers will be unaware that they may actually be paying a set up fee or a renewal fee for their motor insurance . Such fees will be detailed in the accompanying documentation or in the renewal quote ."