Twelve common myths about auto insurance

Insurance can be confusing, and these 12 common misconceptions about auto insurance coverage in Canada often lead drivers astray.

1. The colour of your car affects your insurance rate.

Most people may not know it, but the insurance industry is colour-blind. It doesn't matter if your car is blue, red, silver, white, or black, your insurance rate for that make and model of car will be the same.

Find out more about the most popular car colours.

2. If you lend your car and the driver gets in an accident, it's not your insurance-but theirs-that pays out any claims.

False. Lend your car, lend your insurance.

3. A 2-door car is more expensive to insure than a 4-door.

Not necessarily. People often think a 2-door car is sportier and thus more expensive to insure but insurance companies rate cars based on the claims history of that vehicle--not how many doors it has. They look at things like the car's accident frequency, repair costs, theft frequency, vandalism and safety ratings for each make and model. When these factors are combined, a 4-door could cost more to insure than a 2-door model.

4. Getting a parking ticket means your insurance rates will go up.

Parking tickets do not count against your insurance, but unpaid fines could affect your ability to renew your driver's licence or worse result in a licence suspension - which will affect your rate.

5. Getting a speeding ticket means your insurance rates will go up.

That depends. Your first minor speeding ticket (typically defined as being less than 50 km/h over the speed limit) may not affect your insurance rate; it will depend on your insurer. But, get two or three and you'll probably be paying more to be insured. A major speeding ticket (usually 50 km/h or more over the speed limit) and your rates go up for sure.

6. Your rates will be similar to your neighbour's.

False. Where you live is just one component that affects your rate; there are many others like your driving experience, insurance history, the number of drivers in your home, and the number and type of vehicles you drive.

7. Cheaper cars cost less to insure and luxury cars more to insure.

Not necessarily. Auto insurance premiums are based on many factors including the car's accident frequency, repair costs, theft frequency, vandalism and safety ratings. When these factors are combined, a cheaper car could cost more to insure than a luxury model.

8. You'll pay the same auto insurance rate if you move.

Unlikely. Where you live is one of the factors taken into consideration when determining your rate. When you move, your premiums will likely change; for the lucky, it might mean paying less, for others, it might mean paying more.

9. Your new car will automatically be covered under your trade in's policy.

True and false: It's true, but it won't be covered for long. Most policies require that you notify your insurer within three to seven days of picking up your new wheels. Be certain, notify your insurer before you pick up your new car to make sure you have the coverage you need.

10. The lower your deductible, the lower your premium.

This one confuses many people. A deductible is the portion of an insurance claim you agree to pay; your insurance company picks up the rest. As a result, the more you're willing to take on at the time of a claim, the less you'll have to pay in premiums. Translation: The higher your deductible, the lower your premium.

11. Shopping around for car insurance is only for bad drivers

False. Too often, drivers think that only those with bad driving histories have to shop around. This is simply not true. Everyone, good drivers or bad, should shop around to make sure they're getting the best price for the coverage they need.

12. It doesn't matter which insurance company I have auto insurance with, I'll end up paying the same rate.

Highly unlikely. Auto insurance rates vary considerably from company to company. In fact, each insurer's car insurance rates are so unique to them that it's pretty safe to say that no two are alike.

The last myth proves why shopping around to compare quotes is time well spent. Shop around for insurance quotes to make sure you are getting the coverage you need at the best available price.