Sorting out your insurance needs is no simple task. There are half-truths, misconceptions, and straight up myths when it comes to car insurance in particular. We found 10 myths that needed busting, and we busted them.
1. If you have a bad driving record, you won’t be able to get car insurance
Even with a terrible driving record, you are entitled to car insurance in Canada. Although some insurers may decline to insure you, you do have options, including specialist insurers who deal specifically with drivers with bad records. You will likely have to pay considerably higher premiums though, because your record shows that you’re an insurance risk. As a last resort for drivers with the worst records, the Facility Association – an auto insurance non-profit – will help you find insurance coverage.
2. Red cars cost more to insure
Insurers determine your rates based on the year, make, model, engine size, and age of a vehicle. While there is a widely-believed myth that red cars are more expensive to insure, insurers are not interested in the colour of your vehicle. Flashier cars could cost you more to insure, though – this is because insurance is based partly on how likely your car is to get stolen, how much it would cost to get replaced, and the cost to get it repaired after a crash.
3. Paying higher premiums = greater coverage
False. The cost of insurance – for the exact same coverage, for the same driver, in the same car – can vary across insurers. Each insurance company uses its own data to determine its rates for specific driver-vehicle combinations. Shop around to find the right insurance fit for you.
4. “No-fault insurance” means it’s never your fault
Even with this type of coverage you can – and will – still be considered to be at fault if you are to blame, but the claims process is a little different. The no-fault insurance system means you only deal with your own insurance company for all claims, whether you are at fault or not. Where no-fault systems are in place, even if you are the driver at fault, your insurer only has to pay for the damage to your car, not for damage you caused another other driver. But if you are at fault, you’ll likely see a jump in your insurance rates.
5. Insurance works the same way across all provinces
Nope. Car insurance is based on your postal code. Some areas are closer to major streets and intersections that have more traffic, which can impact pricing because accidents are increased by vehicle volume. Areas with a larger population can also impact your insurance rate – larger populations often have more vehicle crime.
6. Accidents and tickets will raise your insurance rates forever
Not all accidents affect your insurance rates – only crashes where you are at fault will negatively change your premiums. If you are rear-ended, for example, that does not count as your fault, so your insurance company will not punish you for that.
Parking tickets and photo radar tickets are not held against your insurance record. Tickets issued by a cop who has pulled you over, however, could affect your insurance. Insurers care about your three-year driving record, because that’s how long convictions stay on your driving record. A single speeding ticket may not have a huge impact on your premiums, but repeated infractions could cost you – and the more serious driving crimes, with accompanying court convictions, can really hit you hard.
7. If your friend borrows your car and gets into an accident, it won’t affect your insurance
Incorrect. Your friend’s crash in your car will remain on your insurance record, as the policyholder; not your friend’s record. If you have a friend who drives your car all the time, you should get them added to your policy.
8. Your insurance will cover you if your car is stolen, vandalized, or damaged by falling tree limbs, hail, floods, fire, etc.
If your car is broken into and items stolen, or your car is stolen with personal items inside, your auto insurance won’t cover the items you lose to thieves. You’ll need homeowners’, property, or renters’ policy to pick up the bill for that stolen laptop or cellphone.
Weather-related claims – such as hail and flooding damage – probably won’t be covered by basic car insurance. But if you have comprehensive coverage, you should indeed be covered for “acts of God.”
9. Because Canadians have government healthcare, you don’t need injury coverage
In Canada, auto insurers cover the cost of most injury treatment following a crash. According to the Insurance Bureau of Canada, your provincial health insurance and your auto insurer will both be involved in your post-crash health expenses – your provincial health insurance will likely cover all immediate-response injuries performed in a hospital, and then your car insurer will reimburse the provincial government for those medical services. Your liability coverage will pay for injuries you cause to others in an at-fault crash.
10. Being loyal to your insurer means paying less over time
No, it pays to shop around regularly. Even if your insurer offers you a loyalty discount, you could definitely still find a cheaper rate elsewhere. You may well be able to find a better deal with another insurance company, even as a brand new customer.