10 common car insurance myths debunked

MYTH: The type of car I drive has no impact on my insurance rates. FACT: Yes, the type of car that you drive does indeed influence your car insurance rates. Most Canadian insurance companies use a rating system known as the Canadian Loss Experience Automobile Rating (CLEAR). The CLEAR system evaluates vehicles by categories such as safety record, susceptibility to theft, and cost to repair or replace. While there are many factors that are considered when determining your car insurance rate, driving a car with a better CLEAR rating is one way to potentially lower your premiums. Before buying a new car, it’s best to check how it measures up. The Insurance Bureau of Canada maintains a publicly-available fact sheet of popular Canadian models of cars and the statistics that can impact the cost of insuring them.¹
MYTH: Red cars cost more to insure. FACT: The colour of your car has no effect on your car insurance premium. Your premium is calculated based on several factors – including where you live, your driving record, and the make and model of your car – but the colour of your car is not one of them.
MYTH: Being issued a parking ticket will cause my insurance rates to go up. FACT: Parking tickets do not have a direct impact on your car insurance rates. While other driving infractions such as speeding tickets, failing to stop for a stop sign, and at-fault collisions will almost always affect your premium, parking tickets will not. That being said, unpaid parking tickets could affect your ability to renew your car’s license plate.
MYTH: If my car is stolen, my car insurance will cover any personal items that were in the vehicle at the time. FACT: Your car insurance policy is there to ensure that you, your passengers, and your vehicle are protected in the event of an accident. Car insurance does not provide coverage for any items that may be stolen from your vehicle – whether it’s your golf clubs, laptop, smartphone, or all of the above. The good news is that your home insurance or tenant insurance policy will likely be able to provide coverage for any items stolen from your car. Speak with your home insurance broker to assess the contents coverage of your current policy, and ask about other available coverage options.
MYTH: My car insurance rates will stay the same if I move. FACT: Because where you live is an important factor in setting your rates, it’s highly unlikely that your insurance rate will stay the same after moving to a different neighbourhood. Depending on the claim history of the area you are moving to, as well as the distance of your new commute to work, your car insurance premium will typically change.
MYTH: New cars are more expensive to insure than older cars because they’re more likely to be stolen. FACT: According to the Insurance Bureau of Canada’s 2018 list of the top 10 most frequently stolen vehicles, the majority are over a decade old.²There are a variety of factors that insurers consider when calculating your car insurance rates. If your brand-new car costs more to insure than your older car, it could be because it costs more to repair or replace, or is statistically involved in more collisions.
MYTH: If I lend my car to a friend and they get into an accident, it will affect their insurance premiums and not mine. FACT: If the person you loaned your car to gets in an accident while driving your vehicle, it’s typically your insurance coverage that would be used to cover any claims. In this case, any claims filed will likely remain on your insurance record as well. Lending your car generally means lending your car insurance too. Be sure that the driver you choose to hand your keys to is someone you trust to drive safely.
MYTH: Men always pay more for their car insurance than women do. FACT: For men 25 or older, this is untrue. There are many factors that impact your car insurance – such as your driving record, your age, where you live, how far your commute to work is, and the make and model of your vehicle. Men under the age of 25 are generally statistically riskier to insure than women of the same age. As a result, they typically (but not always!) pay more for their car insurance. After a male driver turns 25 and more personal information about the driver and their driving history becomes available, they will generally see a change in their premiums. At this point, most insurers will consider a safe driving record and claims-free history as more important factors than statistical groups.
MYTH: Shopping around for insurance rates will cause my premiums to go up. FACT: Your car insurance will not increase if you shop around for coverage options. It’s important for drivers to shop around, or use an insurance broker, to ensure they’re getting the best possible price for the coverage that suits their individual needs. Insurance brokers shop the market and work on your behalf to help you find the right coverage. An insurance broker also acts as your advocate with politicians, provincial regulators, and insurance companies. For more information on the benefits of using an insurance broker, check out this video.
MYTH: I must wait until my policy’s renewal date to cancel or change insurance companies. FACT: You can cancel your policy before its renewal date. However, cancelling your policy mid-term often subjects you to a cancellation fee. Make sure you’ve done the math to determine if the savings of changing your plan early are worth it. While you’re not locked in until your next renewal date, sometimes it’s best to wait until your policy is close to renewal so that you can cancel without incurring a fee.

If you have any questions about your car insurance policy, or are currently shopping for car insurance, contact an OTIP insurance broker at 1-888-892-4935 to discuss your car insurance options.