There’s a lot of information and perceptions about car insurance out there; some are considered fundamental truths while others, when looked at more closely, often reveal that what we think to be true is simply a myth. The trouble with insurance myths is they can cost us money, or influence decisions we make.

1. Red cars are more expensive to insure

This is false. It is the make, model and year of your vehicle that will affect your insurance rates. Rates charged, contrary to popular belief, do not stem from car colour. Instead, it’s the vehicle’s claims history and average repair cost—not to mention its popularity with thieves—that affects the premium price. In fact, insurance companies don’t even ask for car colour when providing quotes or building a policy.
2. New cars are more attractive to car thievesFalse, in fact, statistics from Insurance Bureau of Canada’s (IBC) top 10 most stolen cars reveal that older cars are most likely to be stolen, contrary to the perception pervaded by the myth.
3. If my car is stolen, I’ll be covered

Not necessarily. This is only true if you have purchased comprehensive coverage, an optional coverage. Comprehensive coverage, if you have it, will pay for damages that are not caused by a collision—things like theft, vandalism, fire, hail and even some damages that involve wildlife.
4. If I cause a collision, the damages to my car will be covered

Again, not necessarily. Damages to your car may be covered, but only if you’ve purchased collision coverage which is optional. Collision coverage will pay for damages caused by a collision that you are wholly or partially at-fault for having caused.

If you are 100% not at-fault for the collision, the damages will likely be covered (even though you may not have collision coverage) through another component of your policy.
5. My loyalty discount offsets any savings I would get by changing insurers at renewal

This is likely false. Switching insurers may cause you to lose your loyalty discount (if in fact you receive one) but that doesn’t mean you’ll pay more for your car insurance. The fact is, some insurance companies may provide a small discount on your premium if you’ve been with them for a long time, but that discount may be insignificant if another company has a rate for you that is considerably less than what you’re currently paying. After all, what good is 5 per cent off an annual rate of $1,500 (a $75 savings) if you could pay $1,200 with another company?

Shop your car insurance rate now to see if you could be saving money!

6. Your auto insurance policy is locked in for the year

Again, false. If you shop around mid-policy and find a better-priced policy, you can cancel your policy before its renewal. However, cancelling your policy before it’s up for renewal may mean you have to pay a cancellation fee. As a result, you’ll want to ensure that the savings are worth more than the cancellation fee. If they’re not, it may be best to wait until your policy is up for renewal, at which time if you cancel, there is no fee or penalty.
7. Higher rates mean more coverage

False again. The rates charged by different insurance companies to insure the same driver, with the same car, for the same exact coverage, can vary by hundreds and even thousands of dollars. Each provider uses their claims experience to determine premiums charged and each company will have a different outlook on a person’s driving history and car combination. As a result, you’ll want to make sure you’re with the “right” insurance company; shop your rates, at minimum, every year.
8. No-fault insurance means “It’s not my fault”

True? False. There’s always fault assigned in an accident. Whether it is all assigned to one person or it’s shared will depend on the collision. No-fault insurance only means your insurance company pays for your damages. If you are in any way responsible for the accident, then chances are you’ll see an increase in your car insurance rates. On the other hand, if you are 100% not at-fault for the collision, your rates won’t likely increase—even though your insurer covered the damages.
9. Males pay more than females for car insurance

This too is false…to an extent. Males under 25 tend to pay a lot more than female drivers of the same age. However, once a driver is 25-years-old, gender is usually no longer a rating category; hence males and females over 25 with the same car and driving history may receive the same rate.
10. All car insurance companies will charge you about the same rate

False. The rates charged by different car insurance companies to insure the same car and driver, for the exact same policy, can vary by hundreds and even thousands of dollars, so it pays to shop around.
11. If I have tickets and accidents, I will always pay a lot for car insurance

This isn’t entirely true. While you may pay more for insurance than someone who has no tickets or accidents, if you shop around you might be surprised to find another insurance company that’s more forgiving of an occasional accident or ticket. Also, tickets usually affect your insurance rate for three years and accidents about six years. Drive better today, and you’ll be investing in lower premiums for the future.
12. If a friend drives my car and causes an accident, it won’t show up on my insurance

False. Insurance coverage is tied to the vehicle and not the person driving it. Therefore, it’s always best to remember that if you lend your car to a friend, you are also lending them your insurance.
13. Your auto insurance rate will increase if you shop around

This is a common misconception. The fact is, your auto insurance rate will not increase just because you’ve shopped around for a better rate. You’ve got nothing to lose, only money to save, by shopping around for your coverage.