Your auto insurance can be confusing. Therefore, when it comes to auto insurance, there is no shortage of myths and misunderstandings surrounding the process of obtaining coverage. Understanding the distinction between fact and fiction can help you make more informed and safer decisions. Here is a breakdown of some common auto insurance myths, and we’re here to debunk them.
Myth: Comprehensive Coverage Means Everything is Covered
Fact: The word comprehensive can be misleading. Many drivers assume it means their insurance covers every possible scenario, but in reality, comprehensive coverage has specific limits. Comprehensive coverage includes non-collision damage, such as theft, fire, vandalism, or hail. However, it doesn’t cover wear and tear, mechanical breakdowns, or damage resulting from poor maintenance. Also, it does not replace any liability or collision coverage.
Myth: Older Cars Are Cheaper to Insure
Fact: It may seem logical that insuring an older car should cost less than insuring a brand-new one. However, that is not always the case. While a lower car value can reduce the cost of collision/comprehensive coverage, different factors come into play. For instance, in some cases, repair parts are discontinued, making older vehicles more challenging to find and more expensive, which further drives up costs. Furthermore, the pricing of your insurance is based on the risk of insuring the car, not just its age.
Myth: Minimum Coverage is Enough
Fact: Every province has a legal minimum requirement for coverage, but meeting that threshold does not guarantee adequate protection for your vehicle. Minimum liability coverage often falls short, particularly in covering the full costs of an accident. If the damages exceed your coverage’s limits, you could end up in some financial trouble. Moreover, additional coverage, such as collision or comprehensive coverage, may be worthwhile to invest in, depending on your specific situation.
We break down all of the mandatory vs. optional insurance coverages here!
Myth: Your Insurance Automatically Covers Rental Cars
Fact: This is a common misconception about insurance coverage. In the case where a rental car is needed, some policies include rental coverage. However, many don’t. Depending on your plan and provider, it may not be included. Many insurers offer rental (loss of use) as an optional endorsement. This is why it is crucial always to check your policy or call your broker before assuming anything is covered.
Myth: Personal Auto Insurance Covers Business Use
Fact: If you are in a situation where your vehicle is used for both work and personal purposes, your policy likely won’t cover it. For example, if you use your vehicle for ridesharing or deliveries, like Uber services, your personal auto insurance may not be sufficient to cover these activities. In these cases, business or commercial coverage is often required. If you do not have this additional coverage, your claim could be denied in the case of an accident.
Myth: If Another Driver Causes the Accident, Their Insurance Always Pays
Fact: While this is commonly the case, it is not necessarily true. There are instances where your coverage may need to step in first. For example, if the other driver is uninsured, disputes fault, or is underinsured, your insurance may be the one paying for damages. This is why it is crucial to have uninsured/underinsured motorist coverage.
Myth: Insurance Follows the Driver
Fact: This is primarily false. In most cases, the auto insurance coverage follows the car, not the driver. For example, if someone borrows your vehicle and gets into an accident, it is your policy that will be liable, not theirs. Therefore, please ensure that if you allow someone to borrow your vehicle, you are prepared to assume the responsibilities in the event of an accident.
Myth: Your Credit Score Doesn’t Impact Your Insurance Premium
Fact: In many parts of the country, insurers do consider credit history when calculating premiums. Credit scores can be used as a risk indicator for insurance companies. However, it is worth noting that this is not true everywhere. For example, it is actually banned in some provinces; however, it is a factor in many places.
Myth: Red Cars Cost More to Insure
Fact: This is just a myth. The colour of your car does not impact your insurance. For example, a bright red sports car may cost more to insure, but that is only because it’s a sports car, not because it’s red. The only factors that matter are:
- Make
- Model
- Year
- Safety features
- Engine size
- Driving history
- Location
Myth: Filing a Claim Always Increases Your Premium
Fact: This is not always the case. Not every claim leads to higher premiums. It depends on the type of claim, who was at fault, and your claims history. Many insurers offer accident forgiveness programs for your first at-fault accident.
Auto insurance can be confusing, and myths can only make it more difficult for drivers to understand their coverage. By separating fact from fiction, you will be better equipped to choose the proper protection for your vehicle, your budget, and your individual needs. If you have any questions about your coverage, please don’t hesitate to contact us.
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