When it comes to insurance, it can be tough to separate myth from fact, but that’s a necessary step to ensuring you get the coverage you need at the rates you can afford. Here are a few car insurance myths to look out for.
- Insurance works in the same way across all Canadian provinces.
Car insurance is not the same across Canada, and there are a couple of reasons why. First of all, different provinces use different insurance systems—either no-fault, tort (at-fault), or a mix of both. Those different systems decide who is considered at-fault in an accident, and which side can sue the other. That’s a big discrepancy among provinces, and not one you want to make assumptions about. Further, insurance providers vary from province to province. Some provinces only have one insurance company supplying car insurance for the whole province—Manitoba (MPI), Saskatchewan (SGI), and BC (ICBC)—while others (Ontario, Quebec, etc.) have multiple providers to choose from.
Damages to your car are always covered.
Not all policies are the same, and the level of coverage you have (comprehensive, liability, collision, etc.) dictates what is covered by your policy if your car is involved in an incident.
- If I have a really bad driving record, I will not be able to get car insurance.
Since car insurance is mandatory in Canada, you will be able to get car insurance as long as you have a valid driver’s license; however, it may be difficult for you to obtain car insurance from one of the mainstream insurers. Many companies offer high-risk auto insurance for individuals who find themselves in this predicament (PAFCO or, as an absolute last resort, Facility Association). Just remember: a really bad driving record will mean really bad insurance rates.
If you lend your car, it will be covered through the insurance policy of another driver.
Whether or not the other driver has insurance is irrelevant in this case. You are, essentially, loaning your insurance policy with your car (although there are sometimes restrictions to this clause based on the age and license status of the other driver), and any incidents the car becomes involved in will be covered by your insurance policy—and your deductible.
No-fault insurance means that none of the parties involved in an accident is at fault.
The term makes this seem like it could be the case, but it is incorrect. There is always an at-fault party in an accident—even if that means the fault has to be split, both parties becoming partially “at-fault.” No-fault insurance refers to the coverage: instead of the at-fault party’s insurer paying alone, both parties’ insurance providers take on the responsibility, resulting in quicker payout times since no time or resources need to be allocated to determine who was at fault.
Other parties can always sue you for damages or/and injuries if you are at-fault.
This depends entirely on the province. In some provinces, it is impossible to be sued by another party, even if you are at fault.
If you get into an accident once or get a ticket, your insurance rates will always stay high.
Happily, this is not true. Accidents and tickets stay on your auto insurance record for three years; that means your rates only stay higher for those three years, and afterwards you’ll be able to benefit from a rate reduction.
Car insurance rates for cheaper cars are lower.
Car insurance rates are not solely based on the value of the car; they are also based on the reputation, or history, of the car model. For instance, insurance rates for Honda Civics can be higher than for more expensive models because of the Civic’s history of being souped up and used for street racing (you can thank films like Fast and the Furious for that). Insurance rates can also be influenced by the cost of replacement parts, so if you are looking at a cheaper foreign model, it may be worth looking into the cost of replacement parts along with the model’s reputation for street racing and theft to get a better idea of your insurance rates.
If I have comprehensive coverage, I can always expect to get OEM (original equipment manufacturers) parts for my vehicle.
This isn’t necessarily true. Sometimes insurers will use aftermarket and recycled parts to reduce claim costs. Make sure you read your policy to find out what you’re covered for, and look at your options: you may be able to get an OEM parts rider added to your policy.
You can always be added as a second driver on your parent’s insurance policy.
Be careful of falling for this myth. While it does seem like a sneaky way to reduce insurance rates, it is known as “fronting” and is actually considered a form of insurance fraud. If you are listed under your parent’s insurance policy and are involved in an accident, an insurance provider could decide to deny your claim.
You do not have to inform the insurance company if you move.
Myth! Even if you simply move locations within the same province, your rates may change based on your location—and that means failing to notify your insurance provider directly impacts your coverage. If you move to Brampton, ON, for instance, your insurance rates will be 65% higher than the provincial average. You need to inform your insurance provider of your move or they hold the right to refuse your claim.
It is more expensive to insure red coloured cars.
This is a very popular and widely spread myth. The color of your car has no impact on the quoting process or the price of your insurance policy.
The tort system encourages better driving behaviours since only an insurance company of an at-fault party pays.
According to the Insurance Bureau of Canada, and to British Columbia’s high level of accidents within a tort system, there is no correlation between the type of the insurance model used in a province and rate of accidents.
Changing deductibles significantly impacts your insurance rates.
This is actually false. Years of thorough analysis of many Canadian insurance companies have demonstrates, this has little to no impact on your insurance rates.
Insurance for two-door cars/convertibles is always more expensive.
Convertible lovers can rejoice: this one’s a myth. Your insurance rates are based on the insurance history of the make and model of your car, not the make or model itself, so convertible or not, if your car has a low history of theft, a low accident history, and its replacement parts aren’t exorbitantly rare, you could actually find yourself with lower rates than drivers of non-convertibles.
The no-fault system results in lower costs since it eliminates the need for expensive legal processes required to determine who is at fault.
The insurance system doesn’t necessarily determine the cost of the policy. Some locations pose more risk than others when it comes to accidents and theft. As a result, those locations tend to have higher insurance rates. For instance, Ontario has a mixed system that leans toward no-fault insurance, and it still has the highest car insurance rates in Canada.