Misconceptions, falsehoods, and perceptions create many insurance myths. Are you covered in a car crash where you’re at fault? What if your car is stolen by a burglar? (Yes to both, so long as you have collision and comprehensive coverage on your policy)
We asked over 1,300 Canadians with auto insurance to see their responses to 10 car insurance myths and see how we did as a nation with our insurance knowledge. In doing so, we hope to shed light and educate Canadians on insurance to help them make better financial decisions.
On average, Canadians got 5 out of 10 questions correct. Those over the age of 35 got more answers right than 18-34 year-olds. I guess experience is a great teacher, too.
Before jumping in, it’s worth noting we did a similar survey in 2019. The good news is it appears Canadians are improving with their insurance myths knowledge.
Do speeding tickets under 15km per hour affect your insurance?
In general, even a minor speeding ticket will impact your insurance and 49% of Canadians knew it.
But, there are some caveats. So, it’s understandable that 1 in 5 Canadians (22%) believe speeding tickets under 15km don’t impact their car insurance and 29% weren’t sure how to answer.
For instance, if you have ticket forgiveness or conviction protector on your policy, you’re essentially paying for protection from rate increases. However, it only protects you against the first ticket with your current insurer. Conviction protector, much like accident forgiveness, is not transferable between companies.
If your rates have increased from a ticket, we always recommend comparing auto insurance quotes and possibly switching companies to find a lower rate. Keep in mind, traffic tickets remain on your driving record for 3 years, so that ticket will impact your rate until it's been scrubbed from your record (not that you can't find cheaper rates elsewhere even with a ticket).
Do red-light cameras affect my car insurance? Does a speed camera ticket affect insurance?
No, automated speed enforcement cameras, such as red-light cameras or machine-run speed traps do not affect your insurance. If you thought they did, you’re not alone. That’s because 60% of Canadians believe speeding tickets from automated speed enforcement cameras impact their car insurance.
The truth is, because these cameras cannot identify the driver, they won't raise your rates. However, these tickets are more expensive than those issued by a police officer, which may lead to confusion.
Does usage-based insurance negatively impact my insurance?
In other words, If you exhibit a pattern of poor driving, like slamming on the brakes, taking hard turns, hitting the gas pedal when the light goes green – does your insurance go up?
No, well, not until recently. In November of 2020, Ontario’s regulatory body (FSRAO) made a policy amendment allowing insurers to increase rates for consistent poor driving for those using usage-based insurance (UBI) or telematics devices.
UBI is a relatively new technology for personal car insurance. It can remove negative demographic labels (e.g. young males are all terrible drivers), resulting in more affordable insurance for good driving behaviours.
Over half of Canadians (56%) believe bad driving behaviours (i.e. speeding, braking suddenly) while using a UBI program, will increase their insurance rate. Another 30% weren't sure.
We get why there is confusion because what started with Ontario car insurance is starting to roll out across Canada.
If you’re curious to learn more about this program, read our page about usage-based insurance to see providers who offer it and potential discounts.
Do I need to notify my insurer about using my car for ride-sharing (e.g. Lyft, Uber) or deliveries (e.g. UberEats, Skip the Dishes, pizza, etc.)
Yes, if you're using your car for commercial purposes (where you can earn an income), you need to notify your insurer. Even a change to your daily commute should signal a change with your insurer because it changes your risk. If you normalize speaking with your insurance provider, you can reap the rewards.
We're happy to see 72% of Canadians know they need to speak with their insurer about delivery or ridesharing car insurance. Especially because if you provide these services and don't notify your insurer, they could deny your claim. Only a few select insurers offer insurance for ridesharing and deliveries, so be sure to shop around if you plan on offering these services.
Does car insurance follow the car or the driver?
While over half of Canadians (55%) believe car insurance follows the driver, not the car, it’s not 100% true.
Myth busted. Well, sort of. Let’s explain.
Car insurance follows the car, which is good news for the people who borrow your car. Unless they're bad drivers because it might not be the smartest decision. If they’re in an accident, it falls to your insurance to cover the associating costs.
However, if they have the OPCF 27 or SEF 27 endorsement (i.e. Liability for damage to non-owned automobile(s), it falls to their insurance, therefore following the driver. This endorsement lets any driver extend their coverage to any vehicle they drive, which is why it's often called the rental car insurance endorsement. With OPCF27, QEF27, or SEF 27, you can typically opt out of paying the rental car company's insurance because you're already paying for it.
READ MORE: Who can drive my car under my insurance?
Compare car insurance quotes from Canada's top providers
Does my postal code affect my insurance rate?
Yes, your postal code affects your insurance. The good news is, back in 2019, when we asked Canadians this question – 39% believed their postal code does not affect their car insurance premium, and this year 66% knew it. However, there's still a percentage of Canadians (19%) who don't think that their postal code impacts their rate, and a further 15% who don't know it at all.
If you live in a densely populated area with heavy congestion, confusing intersections, and possibly tourists unfamiliar with the terrain - there will likely be more accidents. If you live in an area with a sudden uptick in stolen cars, your insurance will reflect that upon renewal.
Does how much I drive affect my insurance?
Yes, you'll pay more to drive more kilometres because the more time you spend on the road increases the chances of needing insurance due to an accident.
Unfortunately, almost a quarter of Canadians (24%) believe how much they drive won't impact their car insurance rate. Fortunately, the number is improving because when we asked in 2019, 42% thought how much you drive doesn't impact your rates.
So, car insurance education is working.
READ MORE: How car insurance rates are calculated
How does insurance determine fault in an accident?
Ask your insurance company because they determine fault, not the police. In fact, 35% of Canadians still believe it's the police who choose fault responsibility, not their insurance company, when submitting an insurance claim. A further 23% didn't know how to answer.
Here’s an extra tidbit: No-fault insurance doesn't mean you can't be found at fault. It means you only deal with your own insurance company. And, did you know that you can be found anywhere from 0 to 100% at fault? Some accidents may be split 50/50, like parking lot collisions.
If you don’t tell your insurance company about a past accident or tickets, will they find out?
Yes, they'll find out. It's as simple as checking your driving record. Once you pay your ticket or receive any conviction it appears on your driving abstract. When your insurance company checks your driving record, they will find out, which typically happens upon renewal.
The majority of Canadians (73%) knew that your insurance company would find out about a ticket or an accident without you informing them. Then, there are 13% who thought the insurer would never find out and another 14% who didn’t know. For that 27%, honesty is the best policy.
Will my insurance go up even if I don’t make a claim?
Will your insurance go up if you make a claim? Yes, generally speaking, if you make a claim over a certain amount where you're primarily at fault, you'll see your claims rise.
And, yes, your insurance can also go up even if you don’t make a claim. Your rate can increase due to any change in risk in your area (e.g. more thefts, heavy flooding, wildfires, etc.). In fact, even the state of your insurer's finances can raise rates (it's why we recommend checking every year and not simply auto-renewing).
Canadians were split on this one. Almost half (46%) know your insurance can go up even if you don't make a claim, and 44% saying no, believing their insurance only goes up if they do make a claim.
The bottom line
Insurance may seem like a black box of complicated algorithms. And many people may believe that an insurance company's main objective is to persuade you into buying something you don't need to ultimately deny your claim. That may be the most significant insurance myth of all. Insurance companies pay millions out every year to help people from sudden and unexpected events.
The more you know about insurance, not only can you save more, but you can rest easier knowing you have the right coverage in place. Take the time to speak with your insurance broker to ask where you may be at risk or underinsured, or even over insured. The more insurance myths busted, the better off we'll all be.