Car Insurance Myths

Your guide to dispelling the most common car insurance myths.

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The top car insurance myths: Debunked!

The internet is rife with misconceptions about auto insurance, and it’s easy to be confused by all the myths out there. Separating fact from fiction will help you make more informed decisions when shopping around for car insurance. Knowledge is power! Don’t let these common misconceptions get in the way of getting the best rates on your car insurance.

Is it more expensive to insure a red car?

No. This is one of those myths that has been around for a long time, but red cars do not cost more to insure than other colours. There is a misconception that red cars get in more accidents, but this isn’t true. While colour doesn’t factor in when insurers calculate car insurance premiums, the make, model and year of the vehicle will definitely affect your insurance rates.

Is insurance for two-door cars/convertibles always more expensive?

This is a myth that needs to be busted. A two-door car is not more expensive to insure, since the number of doors and the car itself being a convertible does not factor into determining insurance rates. Your vehicle’s claims history, likelihood of theft, accident frequency, and repair/replacement costs, etc. are some of the factors that do play a role in calculating premiums.

Is auto insurance cheaper if I sign up when the weather is warmer?

No. It’s a common misconception that summer is a great time to buy auto insurance, since people are buying more cars. Though winter is not a fun time to buy or test drive a car, this doesn’t really affect insurance rates. Insurance companies are regulated by the Financial Service Commission of Ontario (FSCO), and the rates have to be approved by FSCO. Just because it’s warm and sunny, it doesn’t mean you get a ‘seasonal’ cheaper insurance quote.

Will my insurance rates go up if I got a parking ticket?

Let’s debunk this one. Getting a parking ticket is not going to affect your insurance rates since it is not a moving violation. However, if you have too many unpaid parking tickets and your license gets suspended; it will show up on your driving record and will increase your insurance rates. Some of the traffic tickets and violations that can substantially affect your premiums include:
- Speeding tickets (first minor offence for speeding less than 50 km/hr over the limit is forgiven)
- Distracted driving tickets
- Reckless driving/Careless driving
- Driving under the influence
- Failure to stop at a stop sign

If my friend drives my car and causes an accident, my car insurance policy would not have to pay for the claims, right?

Get ready for this. This is totally wrong! If your friend borrows your car, your car insurance goes with the car. Car insurance follows the car, not the driver. If that person gets into an accident or collision, it goes on your record and will affect your insurance rates. It doesn’t matter if your friend has an insurance policy of their own, or great coverage. This is why you should always be cautious with who you lend your vehicle to, as you are essentially lending your auto insurance too.

Are the valuables stolen from inside my car covered under my car insurance policy?

Unfortunately, no. Any personal belongings and valuables that are not permanently attached to your vehicle (such as your phone, laptop, jewellery, wallet, portable GPS devices) and other items stolen from your car are not covered by your auto insurance policy. However, they are typically protected under property insurance (the homeowners or renters insurance policy). Take precautionary measures such as keeping your vehicle locked at all times and installing an anti-theft device.

Do men pay more than women on car insurance?

Not necessarily. Male drivers under the age of 25 are more likely to pay higher car insurance rates, because they are statistically more likely to get in an at-fault accident, compared to their female counterparts

Men under 25 are typically placed in the high-risk bracket by insurance companies. It’s not all bad news though, because as men grow older, their rates start aligning. Of course, there are ways to bring down your premiums too, or prevent them from going up. Building a clean driving record, taking a certified driver’s training course, and taking part in a telematics program are some ways all drivers can save on their car insurance.

Will I be covered by my insurance policy if my car gets stolen?

We hate to break it to you, but this is only true if you have opted to purchase additional coverage as the mandatory minimum coverage does not cover this.

Comprehensive coverage is an optional coverage that will pay for any repairs or replacement to a vehicle for damages caused by something other than a collision; like theft, vandalism, etc. The mandatory minimum required policy will not include comprehensive coverage, so it is always recommended to include additional benefits and protection on to your minimum coverage. Comprehensive and collision are two of the most commonly added optional coverages.

If I am injured in an accident, aren’t my expenses paid for by OHIP?

Another myth, partly. For Ontario drivers, the Ontario Health Insurance Plan (OHIP) does pay for the majority of your medical expenses in the event of injury in a car accident, like basic coverage for your care in the hospital, meals and surgical procedures (with the exception of additional services like cable TV, or a private room). Your insurance provider will pay for things outside the hospital, like income replacement, medical rehabilitation, physiotherapy, and other accident benefits through the accident benefits portion of your auto insurance policies and the tort system.

Do new cars cost more to insure than older cars?

Not necessarily, and not always. Just because your vehicle is an old beater of a car does not mean insurance companies will charge you less. There are a lot of factors that go into determining these rates. Many new cars and high-end vehicles are equipped with better safety and anti-theft features and technology. These safety features along with the possibility of finding cheaper replacement parts due to wider availability will all lead to lower insurance costs. The Insurance Bureau of Canada has a list that show you how different cars measure up.

Does insurance work the same way across all Canadian provinces?

No. Car insurance rates and coverages vary depending on which province you live in as insurance is handled on a provincial level, not a federal one. In all provinces except British Columbia, Saskatchewan, and Manitoba (which rely on provincial run coverage), you can buy car insurance only from private insurance companies.

Quebec is more of a hybrid system, with some insurance incorporated into your driver’s licence and part that must be purchased privately. While Quebec has the least expensive insurance premiums in all of Canada, drivers in British Columbia pay the most on auto insurance premiums, followed by Ontario.

Do I have to inform my insurance company if I move since it will not affect my insurance rates?

Yes, you have to, because where you live affects your insurance premiums. Insurance companies assign different risk levels to postal codes. These are based on the number of claims or perceived risk in a certain area. If your neighbourhood is more prone to vehicle break-ins, for example, or a lot of accidents occur at an intersection your cross daily, this is often reflected in higher rates. In some cases, getting cheaper insurance rates can come down to your postal code.

Do I only need the basic $200,000 in liability coverage?

That depends. Legally, drivers must carry $200,000 in liability coverage as part of the mandatory minimum required coverage in Ontario. However, it is not always enough coverage for all the expenses. In the event of a serious or catastrophic injury, damage, or death, or even modest injuries, this coverage can get exhausted pretty quickly. The mandatory minimum is not usually enough insurance for anyone to carry, and it is often recommended that drivers have at least $1,000,000 in Third Party Liability coverage.

Do insurance companies change rules on coverage and rates as they wish?

No, insurance companies cannot change premiums and rates without government approval. Auto insurance companies in Ontario are governed and regulated by the Financial Services Commission of Ontario (FSCO). The rates and increases have to be approved by the FSCO for them to be implemented. Insurers submit rate requests on a quarterly basis, and approvals are posted on FSCO’s website each quarter.

Can I cancel my auto insurance policy before renewal?

Yes. You are not bound to your insurance provider for the whole year, and you do not have to wait until renewal to cancel or change your existing insurance company. You can shop around mid-policy and cancel your policy should you find a better one suited to your needs and budget. If your policy is cancelled by your mid policy term, the company may calculate your refund on a short rate basis. So, by all means, if you have found a better deal and are ready to switch providers, make sure you are saving! The savings from switching providers often offsets the cost of switching.

If I am involved in an accident and don’t file a claim, will my insurance premiums stay the same?

Maybe not. This is one of those myths that you should definitely avoid like the plague. Anytime that you are involved in an accident where there is damage to another driver’s car or property, you must let your insurance provider know. There is always the probability of the accident being reported (either by a third party or the police), even if you don’t make a claim for damage to your vehicle. If your insurance company finds out about this accident, they could view this as fraud or failure to disclose. As a result, your rates might not just increase, your policy might get cancelled all together.

Does my loyalty discount offset any savings I would get by changing insurers at renewal?

Only partly. It is true that many insurance companies offer a loyalty discount the longer your stay with them and that switching providers may cause you to lose that discount. But it doesn’t mean that you will save more money on auto insurance by being loyal to one insurance company.

We recommend comparing rates regularly and switching your insurance to a provider if you find a significantly lower rate than what you are paying for now. The loyalty discount is a very small amount when it comes to the savings you can find by regularly comparing car insurance rates.

Does my car insurance cover an unexpected collision with a deer on the highway?

Maybe. The majority of large-animal collisions that occur on the roads of Ontario result in damage to the vehicle, but this type of collision is not covered under your mandatory minimum coverage. Instead, this would be covered under the comprehensive and collisions coverage on your policy if you have opted to purchase this insurance.

These coverages are optional and can be added on to your car insurance policy. If a deer was already lying dead on the road when your car struck it, this would typically be covered under the collision coverage whereas if the deer ran onto the road and your car struck it, comprehensive coverage would be applicable.

Does no-fault mean that I will not be at fault if involved in an accident?

No-fault insurance does not mean that drivers are let off the hook in the event of an accident. Rather, regardless of who is found at fault, the policyholder must go through their own insurance company. No-fault insurance simplifies the claims process and makes it easier and faster to get compensated in the event of injury, death, or damage.

In Ontario, the no-fault insurance system is a mix of tort (the right to sue) and no-fault (access to accident benefits). That being said, if you are found to be at fault in an accident or a collision, your insurance premiums may be affected.

Can shopping around for car insurance rates online increase my insurance rates?

Shopping around for better car insurance quotes will never increase your rates. In fact, comparing quotes at least once a year is an ideal way to find cheaper insurance rates. When you shop around online for your coverage, chances are that you will find some substantial savings. In fact, drivers who use RATESDOTCA to complete their quotes are saving an average $480 on their car insurance rates.

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