By law everyone in Canada driving a car must have auto insurance to avoid being heavily fined if they are pulled over, therefore all drivers should have some experience with buying it. It seems odd then, that there are still so many myths and grey areas that could lead you astray and potentially have you shelling out more than you need to.
We decided to pick out ten of the most common auto insurance myths and debunk them so that you can get the most bang for your buck.
The number one myth and source of confusion is this one. Contrary to popular belief it doesn’t matter what colour your car is. Instead it's the make, model and year of your vehicle that will affect your insurance rates. In fact, your insurer probably won’t even ask what colour your car is.
When it comes to the price of your premium, think about your claims history and the average repair cost of your car. Your premium may also shoot up if your car is appealing to thieves, which leads us onto our next point…
Now this one may come as a surprise, but the year your car was built does not necessarily affect the likelihood that it will be swiped from your driveway. In fact, Insurance Bureau of Canada’s (IBC) top 10 most stolen cars of 2017 reveal that it is actually the opposite- the older the car the more likely it is to be stolen. This is especially true if you’re the proud owner of a Ford pickup truck.
“We see from this list that criminals continue to favour all-wheel drive and four-wheel drive, older, high-end vehicles,” said Dan Service, Acting National Director of Investigative Services for IBC.
Insurers base a car’s premiums on a range of variables outside of its worth. As proven in the IBC list, it isn’t necessarily the value of a car that lends itself to theft, and thus insurers are more interested in the estimated frequency and severity of potential claims. They assess factors including the likelihood your car will be involved in a collision, what safety features it is kitted out with and how much it will cost to repair.
Where you live is one of the factors that insurers take into account when calculating the cost payable by you. Insurers will assess an area for any potential risks, which could see your figure rise, or fall, depending on location. For example, some neighbourhoods will have fewer instances of car theft, while other areas may have a high number of accident-prone intersections.
Insurers may also take into account risks such as if you live in an area that experiences earthquakes, and may suggest you take out additional coverage. Mileage also falls into this category: living closer to your workplace may result in your premiums reducing.
In any case, it is vital that you inform your insurer if you move. Not only could this potentially save you some dollars, but failing to do so could be deemed as fraud due to rate evasion.
Unfortunately this isn’t the case. For the most part, insurance travels with the car, and therefore any at-fault accident will raise the vehicle owner’s premium- even if you weren’t the one driving. By handing over the keys to your car, you are partially taking responsibility for any incidents that may occur when your buddy is behind the wheel.
If your friend ends up in a sticky situation while in your car, the insurance policy you have should cover the damage if it includes collision coverage. The vehicle’s deductible will also apply in order to fix any damage caused to your car, it’s up to you and the person who was driving your car to decide who will cash out to cover this.
Depending on the scale of the accident, if your liability is not high enough to pay for all of the damages, hopefully the responsible driver’s liability coverage will be enough to cover the rest of the damages. If the driver is uninsured and caused an accident in your vehicle, the bad news is that you could be liable for everything!
Admittedly this is a bit of a confusing one. Many people assume that because they have an insurance policy they are fully covered in the event of an accident, be it there fault or not. However, this isn’t totally the case.
The key thing here is collision coverage. If you have purchased this option addon, you will be covered for any crash that you are wholly or partially at-fault for, so long as you pay your deductible.
If the fault lies with the other driver, the damages will likely be covered through another component of your policy, even if you don’t have collision coverage.
As a kid did your mom ever warn you that: “the truth will always come out”? Well that is certainly the case here. It might seem like you are dodging a bullet by simply not reporting your accident, and instead covering any costs yourself, but if you’re caught out the repercussions could be damaging. The other driver may choose to file a claim, in which case it is only a short time until their insurance provider contacts your insurance provider and then your little secret isn’t much of a secret anymore.
Additionally, if you were issued a ticket as a result of the crash, it can appear on your driving record.
In any scenario, you will most likely see your premiums increase.
This is only the case if you have taken out comprehensive coverage - another optional addon. Comprehensive coverage will have your back when it comes to things like theft, vandalism, fire, extreme weather and possibly even damage caused by pesky wildlife.
Similarly, any valuable items left in your car are not covered if they are stolen or damaged in an accident. Think cell phones, sporting equipment or jewellery - these items should instead be covered under the property insurance policy that fits your residence.
While you may have racked up a pretty decent loyalty discount over the years, this doesn’t mean that a new insurer couldn’t match or even beat it. Some insurance companies are willing to offer you a first time buy rate in a bid to lure you away from your old company. Shop around to see if you can find a cheaper rate to suit your needs.