Insurance Myths – Fact or Fiction

For a lot of people insurance is like banking, important to have but hard to understand. There are a lot of insurance myths out there on how fees are paid and what is and isn’t covered.

Do you know which of these insurance questions are fact or fiction?

  • The colour of my car can impact my auto rates. False. Auto insurance premiums are made up of a variety of factors, including make, model and age of the vehicle but colour isn’t part of that formula.
  • If you’re in a car accident but don’t file a claim your premiums remain the same. False. An accident can affect your rates even if you don’t report it to your agent.
  • Where you live and work has a bearing on your rates. True. Rates can vary dramatically in areas with notoriously high accident corridors. Make sure you update your agent as soon as you move.
  • Any medical expenses related to an auto accident are paid by the province. False. Auto insurers actually pay more for medical rehabilitation costs in Canada than the government, WCB or private health-care plans combined.
  • Seatbelt tickets will affect my insurance premiums. True. If you’re in a collision and not wearing a seatbelt you are more likely to sustain injuries. And injuries resulting from being thrown from a car is a costly problem for both you and the insurer. On the bright side, those pesky parking tickets won’t affect your premiums.
  • Any accident, ticket or demerit point is on your permanent record when it comes to insurance rates. False. Actually they only affect your rates for three years, as long as you maintain a clean driving record after that you should see a reduction in rates.
  • If you lend your car to another insured driver, it is covered by the other driver. False. If it is your car involved in the accident, it is your insurance policy that covers the damages.
  • The cheaper the car, the less expensive the rates. False. Although the value of the car is taken into consideration, it’s the history of the model that counts when calculating rates – such as theft rate and accident history, etc.

If you’ve heard some insurance “fact” from a neighbour or cousin, take a moment to ask the professionals – your insurance broker – about just what is fact and fiction about your insurance.

Find more insurance myths at the Insurance Bureau of Canada