Auto insurance myths debunked - Part 1
Not everything you hear is true.
And that applies to auto insurance. It’s important to understand the factors that affect your policy cost and coverage … and what doesn’t. Here we debunk some of the most common myths:
MYTH: If a friend drives my car and causes an accident, it won't show up on my insurance.
FACT:Insurance coverage is tied to the vehicle and not the person driving it. It’s best to remember that if you lend your car to a friend, you are also lending them your insurance.
MYTH: I don’t need to tell my insurer if I’m using my car for ride-sharing or delivery purposes.
FACT: Any time you change the usage of your car you must notify your insurer. While Uber, for example, provides its own direct insurance to its drivers, Ontario’s insurance companies will need to calculate their own assessments of risk for vehicles serving as part-time taxis.
MYTH: Red cars are more expensive to insure.
FACT: It is the make, model, and year of your vehicle that will affect your insurance rate. The premium you’re charged doesn’t take into account car colour. It’s the vehicle’s claims history, average repair cost, and popularity with thieves that affect the premium.
RELATED READING: The 10 least expensive vehicles to insure
MYTH: My credit has no effect on my insurance rate.
FACT: Your credit history may matter. A good credit score shows how well you manage your financial affairs. It has been shown to be a good predictor of whether someone is more likely to file an insurance claim so many insurers take it into consideration when you want to purchase, change, or renew your coverage. Those with good credit scores often end up paying less.
MYTH: Auto insurance policies are locked in for the year.
FACT: If you shop around mid-policy and find a lower price, you can cancel your policy before its renewal. However, doing so may mean you have to pay a cancellation fee. You’ll want to make sure the savings are worth more than the cancellation fee. If they aren’t, it’s best to wait until your policy is up for renewal. Then, if you cancel, there is no fee or penalty.
RELATED READING: What you need to know about cancelling your car insurance policy early
MYTH: No-fault insurance means “It’s not my fault.”
FACT: There is always fault assigned in an accident. But whether it’s all assigned to one person or shared depends on the accident. No-fault insurance only means your insurer pays for your damages. If you are responsible for the collision, then you’ll see an increase in your rates.
MYTH: If my car is stolen, I’ll be covered.
FACT: Not necessarily. This is only true if you’ve purchased comprehensive insurance, which is optional coverage. Comprehensive pays for damages (or losses) caused by things like theft, vandalism, fire, or hail.
MYTH: If I demonstrate bad driving behaviours, for example, speeding or braking suddenly, while using a usage-based insurance (UBI) program my rates will increase.
FACT:It depends on your insurer and your UBI program. If you consistently display bad driving behaviours, your rates could go up. That being said, not all programs negatively affect your premium.
MYTH: Insurance for two-door cars and convertibles is more expensive.
FACT: A two-door car is not more expensive to insure, since the number of doors and the car being a convertible doesn’t factor into determining insurance rates. Your vehicle’s claims history, the likelihood of theft, accident frequency, and repair/replacement costs, are some of the factors that do play a role in calculating rates.