Car insurance myths

More demerit points leads to higher car insurance costs

FALSE. They do not affect your premium. Demerit points are used by the provincial government to decide if you can keep your driver’s licence. However, insurance providers will look at the number of tickets you have, and the severity of those tickets. Each insurer has its own set of rules – some may forgive a minor ticket, but others may charge up to 10%

An expensive or high-end vehicle costs more to insure than a less expensive one

This isn’t always the case. Insurers consider multiple factors such as how easy it is to steal the vehicle you drive, how expensive it is to repair, your age, gender, marital status, where you live, your driving and claims history, and how much you drive.

You will find better car insurance rates in the summer

FALSE. It’s a common misconception that summer is a great time to buy auto insurance, since people are buying more cars. Though winter is not a fun time to buy or test drive a car, this doesn’t really affect insurance rates. Ontario insurance companies need permission from the Financial Services Regulatory Authority of Ontario (FSRA) to change their rates, which can happen every week.

If you swerve to avoid hitting a deer, insurance will not cover the damages

FALSE. While it is true that swerving can be dangerous and costly, it does not automatically disqualify you from coverage. If you swerve to avoid the animal and run into something, then you would need Collision Coverage. This may be regarded as an at-fault collision, which can increase your premium.

If the deer suddenly ran onto the road, you would file damage claims under Comprehensive Coverage. This coverage provides protection from random, unavoidable events, such as falling or flying objects, theft, and so on.

Loyalty always pays

Not always! It’s important to note that only some insurers offer a loyalty discount for sticking around. Different insurers offer various discounts – so when you stay, you could be missing out on perks like accident and claims forgiveness, bundling benefits, and safe driver rewards.

Remember, loyalty isn’t always the key to savings. Shop around and compare quotes online to find your best rate.

In a collision, the at-fault driver pays for the accident

FALSE. Before 1990, the driver who was at fault was responsible for paying for damages and injuries. This was a drawn-out process that left drivers waiting in limbo while insurance companies went head-to-head in court.

Today, Ontario’s no-fault insurance system allows you to deal solely with your own insurance company, regardless of who caused the accident. This enables you to receive your claim payout sooner and avoid expensive court fees.

The person borrowing your car must have their own insurance

FALSE. When you lend your car to someone, you’re also lending your insurance.

If they get in an accident while driving your vehicle, it’s typically your insurance coverage that would be used to cover the damages. In this case, any claims filed will likely remain on your insurance record as well. Be sure that the driver you choose to hand your keys to is someone you trust to drive safely.

Comprehensive coverage means my vehicle is covered for everything

FALSE! Comprehensive insurance coverage does not cover damages resulting from a vehicle-on-vehicle collision. However, it does pay for damages or losses resulting from random, unavoidable events. Examples include theft, vandalism, fire, hail and objects that fall on your vehicle (like a tree branch) or that fly off the road (like a stone off the back of a truck).

Insurance companies can change their rates as they wish

FALSE! Ontario insurance companies cannot change their rates without government approval. Insurers can ask for rate changes every 3 months, but these changes won’t impact your premium until it’s time for your policy renewal.

The primary reason insurers change their rates is because market conditions shift, affecting the overall cost of auto insurance. The premiums they charge must cover claims, expenses, and still make a reasonable profit.

Red cars cost more to insure

FALSE. While your auto insurance is based on a number of variables, the colour of your car is not one of them. Your insurer does not care if your car is red, blue or black. 

However, your insurance premium will depend on the make, model, and year of your vehicle. Insurers in Ontario have different methods to estimate the likelihood and cost of your claims, so they charge different prices for the same coverage.