There’s a lot of tricky information and fine print in the auto insurance industry. In fact, some of these myths can be so believable that it actually influences some people in the decisions that they make and eventually costs them money. These myths have been around for a while so it seems quite believable. Let’s take a closer look at some of these and separate the truth from fiction.
1. If A Car Is Red, It’s More Expensive To Insure
Arguably, the most famous myth. Colour doesn’t matter. The make, the model and the year is what influences your rates. A car’s colour does not have any impact on your insurance rates, so this is definitely a myth.
2. If A Car Is Stored In The Garage, The Home Insurance Policy Covers It
This is a myth. A car should be covered by your auto insurance policy and not the home insurance policy.
3. New Cars Are More Likely To Be Stolen
Another myth. Statistics from Insurance Bureau of Canada point out that older cars are more likely to be stolen. While new cars are appealing to thieves, slightly older cars make up the greater numbers.
4. If I Cause A Collision, Damages To My Car Are Always Covered
Not entirely true. You will only be covered if you bought collision coverage. This is optional, so if you did not purchase it, you’re out of luck. If you have this coverage and the collision was partially or completely your fault, you’ll be covered.
5. You Don’t Have To Inform The Insurance Company If You Move
Where you live actually plays a big role in your car insurance rates. Depending on factors such as the neighbourhood (safe, or high in crime), this will have a bearing on your rates. If you do not inform them and you eventually want to make a claim, you can actually be refused. The best thing to do is to be honest and inform them if you move.
6. If Your Car Is Stolen, You’re Covered
This is not entirely true. If you’ve purchased comprehensive coverage, which is an optional coverage, then yes, it’s true. Comprehensive coverage pays for things like theft, fire and vandalism.
7. No-Fault Insurance Means It’s Not Your Fault
Not true. In an accident, someone or something is always at fault. In no-fault insurance, the insurance company will pay up, but you’ll likely see your rates go up if you were somehow responsible. However, if you were not, the insurance company will still pay up and your rates won’t go higher.
8. All Insurance Companies Charge The Same Rate
No, they do not. This is where shopping around before you get your policy will make a huge difference for you. To insure the same car and the same driver for the very same policy, there can be a variance of several hundred dollars or possibly thousands of dollars!
9. A Friend Drives Your Car, Is Involved In An Accident, It Will Not Show Up On Your Insurance
This is false. Insurance is tied to the car, not the driver. So, if your friend is in a crash, you, as the policy holder for that vehicle, will be affected.
Just remember to shop around for decent, affordable car insurance, since some are more expensive than others for the same policy. Make sure to read the fine print to understand your responsibilities.