17 Misleading Car Insurance Myths You Should Know

The reason many people overpay for car insurance is because they do not fully understand it. Today, InsurEye, a Canadian insurance review platform for all insurance types, is here to explain car insurance’s most prevailing myths. As the saying goes, the truth shall set you free… well, at least in this case, the truth shall save you money!

Myth #1: Convertibles have the highest insurance.
False: Car insurance is based on the previous insurance history for each car’s category. For example, some two-door cars have a greater history of being favoured by speedy drivers, therefore a sedan may actually cost more to insure than a convertible. Remember, however, that the value of the car and the driver’s own record are also considerations.

Myth #2: It is more expensive to insure red cars.
False: While some drivers complain that they get busted more often for speeding when driving a red car, insurers do not consider the colour of a car during quoting. Feel free to paint the car red with flames racing up the side. It’s not going to hurt the insurance rate (but it will look really cool).

Myth #3: Car insurance rates for cheaper cars are lower.
False: Again, car insurance is tied to the model’s history. For example, Ford F350 are a mid-priced car but can cost more to insure than more expensive models. Why? They are stolen often. Here is a list of the most stolen vehicles in Canada, by year and province.

Myth #4: An accident or a ticket means insurance rates will always stay high.

False: Any spikes seen by tickets or accidents are not permanent. A ticket affects the insurance rate for three years. In the case of an accident, the rate will improve year over year as long as the driver’s record stays clean.

Myth #5: Young drivers can always be added as a second driver on their parent’s insurance policy.

False: Many young drivers exploit the “second driver” rule so they can save money.  In the insurance world, this is called fronting, which is a type of insurance fraud. If a young driver is fronting and gets into an accident, the insurer may refuse the claim. Talk to your insurer about who you want to add as a second driver to ensure they qualify.

Myth #6: It’s okay to lend out your car – it will be covered through the insurance policy of another driver.

False: The car owner’s insurance is on the line anytime he or she lends out the vehicle.

Myth #7: Drivers with a really bad driving record will not be able to get car insurance.

False: There are companies that work specifically with bad drivers that have managed to retain their license. The downside is that the rates are very, very high. The last resort for drivers that don’t qualify for mainstream or for speciality insurance is the Facility Association. Again, the trade-off is exorbitant rates.

Myth #8: Car theft is always covered.

False: Theft is only covered under a comprehensive policy. Liability-only coverage (a popular choice to save money for those with older cars), does not cover theft.  

Myth #9: Damages to the car are always covered.

False: Damage is only covered under the collision as part of the policy. As with theft, those with older vehicles often opt out of collision coverage to save money.

Myth #10: Glass coverage means new glass every time.
False: If the glass can be repaired instead of replaced, the driver will likely not get a new windshield or window.

Myth #10: The insurance company does not need to know about a move.
False: An insurer can refuse a claim if the driver does not inform them of a move, as premiums are strongly linked to location. Some areas of Ontario, for example Brampton, have the highest premiums in the country.

Myth #11: Insurers will always lowball me on the cost of a written-off vehicle.
False: Insurance adjusters use the sources like the Blue Book when valuating a car. Those that expect their vehicle to be compared to a new car, rather than one of similar age and upkeep, may feel lowballed.

Myth #12: With comprehensive coverage, drivers can always expect to get OEM (original equipment manufacturer) parts for their vehicles.
Sometimes: This myth is neither true nor false. Some insurers offer an OEM rider, others may always opt for aftermarket or used parts to reduce the costs of claims.

Myth #13: Other parties can always sue for damages or/and injuries if the other driver is at-fault.
Sometimes: This is another myth that is neither true nor false – it depends on the province. In some provinces the injured party can sue. In others, they cannot, even if the other party is at-fault.

Myth #14: Insurance works the same way across all Canadian provinces.
False: There are major differences in coverage and premiums across Canada, and drivers need to be aware of them. For example, some provinces use a no-fault system, but others use an at-fault (also called tort) system….or a mix of both! Additionally, in some provinces, insurers can compete for business, but in Manitoba, Saskatchewan and British Columbia, only MPI (for MB), SGI (for SK) and ICBC (for BC) can offer basis car insurance coverage.

Myth #15: The tort system encourages better driving behaviour since only the insurance company of an at-fault party pays.
False: The Insurance Bureau of Canada has determined no correlation between the type of the insurance model and the accident rate. For example, British Columbia has a tort insurance system, but also a high accident rate.

Myth #16: The no-fault system results in lower costs since it eliminates the need for expensive legal processes required to determine who is at fault.
False: Ontario uses both systems, but still has the highest car insurance in Canada.

Myth #17: No-fault insurance means that none of the parties involved in an accident is at fault.
False: Fault is either linked to one driver or fault can be split between both drivers. No-fault simply means that both driver’s insurance companies split the cost, no matter who is at fault. This system creates faster processing and payout times, so less time and money is used fighting to determine who pays for the accident.

Now that we have explained the truth about 17 popular car myths, drivers can shop for cheap auto insurance with confidence or get a motorcycle insurance quote without being confused by insurance rumors.