18 Myths About Car Insurance
Not everything you read is true.
Debunking common myths about auto insurance that steer drivers in the wrong direction.
There are a lot of myths and misconceptions about auto insurance in Canada that often lead Canada's 26 million licensed drivers down the wrong road. Let's right these wrongs today so that the route ahead is clear.
Top Myths About Auto Insurance
- Car colour affects your car insurance premium
Chances are you've heard that red cars cost more to insure. They aren't. It doesn't matter if your car is red, blue, silver, white, or black, your insurance rate for that make and model of car will be the same regardless of its hue.
- Lending your car to a friend won't affect your premiums if they get in an accident
In general, if you lend your car, you're also lending your insurance. It pays to be extra picky about who you hand over your car keys to because if they're found to be at-fault for a collision it's usually your coverage that will cover any claims.
- A two-door is more expensive to insure than a four-door
Not necessarily. The number of doors a car has is not indicative of how much the vehicle costs to insure. What does matter, however, is the vehicle's accident frequency, repair costs, theft frequency, likelihood of vandalism as well as safety ratings, for example. When these factors are combined, a four-door could cost more to insure than a two-door model.
- Getting a parking ticket means your insurance rates will go up
Parking tickets do not count against your insurance, but unpaid tickets could affect your ability to renew your vehicle's licence plate.
- Getting a speeding ticket means your insurance rates will go up
Your first ticket may not affect your rates if it's a minor speeding ticket. It will depend on your insurer as some are more forgiving than others. A minor speeding ticket is usually defined as being less than 45 km/h over the posted limit. If, however, you've got several tickets on your driver's record already, you'll probably pay 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.
- All traffic tickets will affect your premiums in the same way
There are three types of traffic tickets: minor, major, and criminal or serious convictions, and each has a different affect on your premiums.
A minor ticket may not increase your premiums much, if at all, if it's your only ticket in the last three years. Speeding (less than 45 km/h over the limit), failing to signal a turn or lane change, or not wearing your seat belt are common examples of a minor ticket.
A major ticket, on the other hand, will have a major impact on the rates you pay. These tickets are more serious in nature and the penalties reflect this reality. Distracted driving, speeding in a school or construction zone, or speeding in excess of 50 km/h are examples of what is typically classified as a major speeding ticket.
The most severe financial penalties are reserved for criminal or serious convictions. This type of conviction takes into account your province's Highway Traffic Act or the country's Criminal Code and often comes with the threat of a licence suspension or even jail time. Examples include racing, impaired driving, and leaving the scene of an accident.
- Auto insurance covers personal items in your vehicle from theft
Nope. If items are stolen from your vehicle, like your golf clubs, smart phone, or laptop, it's your home insurance (or condo or tenant policy) that will provide you with the coverage you need to replace these valuables, not your auto insurance.
- Thieves target new cars to steal
In general, this is not true. According to last year's list of Canada's most stolen vehicles, nine out of the 10 most targeted vehicles were at least 12 model years old. This is true in most areas of the country, with the exception of Quebec where thieves prefer newer model vehicles.
- Men always pay more for auto insurance
If you're 25 or older, this is in fact a myth. At 25, from an insurance standpoint, a male driver will be treated the same as his female counterpart. Young male drivers, however, do pay higher premiums prior to hitting the quarter century mark.
- Your rates will be similar to your neighbour's
Where you live is just one component that affects your auto insurance rate. There are many others too, like your driving experience, insurance history, traffic tickets, the number of drivers in your home, and the type of vehicle you drive that together play a role in what you pay for coverage.
- 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. It all depends on the claims history of the new neighbourhood you're moving into.
- Your new car will be automatically covered under your trade-in's policy
Yes and no: You may have coverage, but it won't be for long and it will mirror the coverage you had on your old vehicle, which may not be sufficient for your new set of wheels. Your best bet is to notify your insurer before you pick up your new car to make sure your policy is updated in a timely manner and you have the coverage you need.
- 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.
- Shopping around for coverage is only necessary for drivers with a poor driving history
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.
- Your auto insurance rate will increase if you shop around
Absolutely not. This is a common fear we hear from consumers, but the fact is, your auto insurance rate will not increase just because you've shopped around for your coverage.
- Your auto insurance policy is locked in for the year, no matter what
Again, false. If you shop around mid-policy and find that another auto insurer offers you the coverage you need at a better rate, you can cancel your policy before its renewal. However, if you do cancel your policy mid-term you may be subject to a cancellation fee, so you'll want to ensure that the savings are worth it. If they're not, it may be best to wait until your policy is up for renewal, at which time if you cancel, there is no fee.
- A loyalty discount ensures the best available price for coverage
Everyone is fearful of losing their loyalty discount, which usually amounts about five percent. And while it's true, your loyalty discount can result in a great car insurance rate, you could save considerably more by shopping around when it's time to renew.
- All insurers offer the same rates
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.
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The truth about lower auto insurance rates
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