Busting car insurance myths
You can opt to drive a hybrid or a gasoline powered car. You can choose the year, colour, make and model. But the choice ends when it comes to the actual driving.
You need registration, an operator’s permit and an insurance policy. Of those three requirements, insurance is often the most misunderstood, and the industry is fraught with myths.
Just ask Anne Marie Thomas, manager of sales and new business development at Canada’s InsuranceHotline.com.
“We have consumers e-mailing us questions all of the time,” Thomas says during a telephone interview from her office in Toronto.
“And, if you work at any level in the insurance industry, the minute people find out you’re in insurance they ask if such and such is true or not.”
Just like the doctor has to deal with impromptu diagnosis of symptoms at a dinner party, the insurance broker has to answer questions about car coverage and liability.
InsuranceHotline.comhas been around since 1994, and that makes it the oldest comparative quoting service in Canada.
It is an independent online automotive policy rate comparison search engine. It is not owned in part or in whole by any insurance company or broker.
The service is free. A policy shopper enters some basic information and InsuranceHotline.comfinds the lowest three rates.
According to Thomas, her company is able to search 30 insurance providers.
We asked Thomas to help dispel some of the common automotive insurance myths.
Myth One: Red cars cost more to insure than any other colour.
A: The colour of your car plays no part in the calculation of your insurance premium. In fact, that question is not even asked on the auto insurance application.
Myth Two: All car insurance policies cost about the same.
A: Not true. Rates can vary by hundreds of dollars across insurance companies for virtually the same policy, and they are always changing, so it pays to shop around.
And, here’s a myth related to Myth Two: Your broker or agent can shop your business and find you the lowest rate available.
A: That’s not always true, because they can only shop around among the limited number of companies they represent, typically no more than four or five.
Myth Three: If I switch my car insurance company, I will lose my loyalty discount.
A: That’s possibly true, but depending upon the rate of the new company and the discounts that they may offer (not all discounts are the same, age, winter tires, etc.), it may be worth your while to change regardless of this loyalty discount.
Myth Four: I pay more than my friend so I must have more coverage.
A: Not necessarily true. The basic policy and minimum coverages are the same regardless of who you are insured with. Rates for optional coverages like collision or comprehensive can vary widely across companies, so paying more does not necessarily mean you are getting more.
Myth Five: The police did not charge me with the accident so I’m not at fault.
A: Not always true. You could be found by your insurance company to be at fault in an accident and not be charged by the police.
Myth Six: I don’t have a good driving record. I should just stay where I am with the same insurance company.
A: No. It still pays to shop around. Not all insurance company rates are the same and they can vary by hundreds of dollars for a given car and driver, regardless of whether they have a clean driving record or several tickets and accidents.
The trick is finding which company has the lowest rates for you and your profile.
Myth Seven: If my friend drives my car and causes an accident, it won’t show up on my insurance record.
A: Wrong. Your insurance history (claims, drivers on the policy, reason your previous policies were cancelled, etc.) is available to all insurance companies and is used by them as a key factor in determining the rate they can offer you on your car insurance.
And, when you lend your car, you are in effect, lending your car insurance.
Myth Eight: My car was hit when it was parked and I don’t know who hit it. If I make a claim it will be not at fault.
A: Maybe. Most insurance companies require that you report a “hit and run” to the police within 24 hours. If you don’t report it to the police, any payout for the damage may be considered an at fault accident.
Photograph by: Andrew Yates, AFP/Getty Images