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HomeCar Insurance ResourcesCommon Car Insurance Myths in Canada

Car insurance regulations differ across Canada’s provinces and territories. While general misconceptions about car insurance might be widespread, some myths might be more prevalent or relevant in specific regions due to their unique regulatory environments.

Here are some car insurance myths across different Canadian provinces:

  1. British Columbia (BC)
    • Myth: Public insurance is always cheaper than private insurance.
      • Fact: Rates depend on multiple factors, including driving history, vehicle type, and more. Some drivers might find better rates or coverage options with private insurers in other provinces.
  2. Alberta
    • Myth: After an accident, my rates will skyrocket.
      • Fact: While your rates might increase, Alberta’s grid rating system places a cap on the maximum premium insurers can charge for basic coverage.
  3. Saskatchewan
    • Myth: All drivers pay the same insurance rate.
      • Fact: While Saskatchewan has a publicly run auto insurance system, rates can vary based on factors like the vehicle, its use, and the driver’s history.
  4. Manitoba
    • Myth: Public insurance doesn’t offer as many options.
      • Fact: Manitoba Public Insurance (MPI) offers various coverage levels, deductibles, and extensions.
  5. Ontario
    • Myth: Red cars are more expensive to insure.
      • Fact: The color of your car does not impact insurance premiums. However, the make, model, year, and usage do.
  6. Quebec
    • Myth: You only need to insure your vehicle with the public insurer.
      • Fact: In Quebec, the Société de l’assurance automobile du Québec (SAAQ) covers bodily injury, but drivers must get property damage coverage from private insurers.
  7. Atlantic Provinces (New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince Edward Island)
    • Myth: My auto insurance covers me everywhere in North America.
      • Fact: While many policies do provide coverage across North America, you should always check your policy details before traveling.
  8. Territories (Yukon, Northwest Territories, Nunavut)
    • Myth: Car insurance isn’t necessary in the North because of the low population.
      • Fact: Car insurance is mandatory, and it’s crucial for protection, especially considering the challenging driving conditions.

Common Myths Across Canada:

  1. Age and Gender Myth: Younger males always pay more for car insurance.
    • Fact: While age and gender can play roles in determining premiums, other factors, like driving history and the type of vehicle, are also critical.
  2. Parking Ticket Myth: Parking tickets affect my insurance rates.
    • Fact: Only driving infractions or violations (like speeding tickets) can potentially affect your rates. Parking tickets do not.
  3. No-Fault Insurance Myth: “No-fault insurance” means I am not at fault in an accident.
    • Fact: “No-fault insurance” means that each driver’s insurance pays for their damages, regardless of who was at fault. Fault is still determined and can impact future premiums.
  4. Loyalty Discount Myth: Staying with one insurer for a long time will always get me the best rates.
    • Fact: While many insurance companies offer loyalty discounts, it doesn’t necessarily mean you’re getting the best rate overall. It’s a good practice to shop around and compare rates periodically.
  5. Comprehensive Coverage Myth: If I have comprehensive coverage, I’m covered for everything.
    • Fact: Comprehensive coverage typically covers damages from events like theft, vandalism, and natural disasters. It does not mean you’re covered for all types of accidents or damages. Always read the specifics of your policy.
  6. Personal Items Myth: My personal items inside the car are covered if they’re stolen.
    • Fact: Car insurance often doesn’t cover personal items left in a vehicle. Home or renters insurance might cover these items, but it’s essential to check both policies.
  7. Payment Plan Myth: Monthly payments are the only way to pay for car insurance.
    • Fact: Many insurers offer different payment options, including bi-annual or annual payments, which might even come with discounts for paying upfront.
  8. Territory Myth: Living in a city vs. the countryside doesn’t affect my rates.
    • Fact: Urban areas, with higher traffic and theft rates, often have higher insurance premiums than rural areas.
  9. Credit Score Myth: My credit score doesn’t impact my insurance rates.
    • Fact: In some provinces, insurers might consider credit scores when determining rates, believing there’s a correlation between credit behavior and insurance claims.
  10. Older Car Myth: An older car always costs less to insure.
    • Fact: While newer models might have higher comprehensive insurance costs due to their value, older cars might lack safety features, which can affect other parts of your insurance. The vehicle’s make, model, safety features, and repair costs all play a role in determining rates.
  11. Deductible Myth: A higher deductible means I’ll pay more out of pocket for an accident.
    • Fact: A higher deductible usually results in a lower premium. However, it means that in the event of a claim, you will pay more out of pocket before the insurance coverage kicks in.
  12. Claim Myth: If I file a claim, my rates will automatically go up.
    • Fact: Not all claims will lead to an increased rate. It depends on the nature of the claim, who was at fault, and your previous claims history.
  13. “Acts of God” Myth: My basic auto insurance covers all “Acts of God.”
    • Fact: While some people believe that natural disasters or “Acts of God” (like earthquakes, floods, etc.) are automatically covered by standard policies, often they are covered under comprehensive or specified perils policies. Always check to be sure.
  14. Rental Car Myth: My auto insurance automatically covers rental cars.
    • Fact: Your auto insurance might not cover rental vehicles fully. While some policies may extend to rental cars, there might be restrictions or limits. Many people often buy additional coverage through the rental company for full protection.
  15. OEM Parts Myth: If I have an accident, my insurance will cover Original Equipment Manufacturer (OEM) parts for repairs.
    • Fact: Unless specified in your policy, insurers might opt for aftermarket or used parts to repair your vehicle after an accident. You might need an endorsement for guaranteed OEM parts.
  16. Private Sale Myth: If I buy a car in a private sale, my current insurance will automatically cover it.
    • Fact: While some insurance policies might offer a grace period for newly purchased vehicles, it’s always wise to inform your insurer before or immediately after buying a new car, especially in a private sale.
  17. Discounts Myth: The discounts I get when I first sign up are the only ones available.
    • Fact: Discounts can change, and new ones might become available. It’s good to periodically review your policy and ask about any new discounts for which you might qualify, like multi-policy discounts, winter tire discounts, or defensive driving course discounts.
  18. Previous Repairs Myth: Previous repairs on my vehicle will not affect my insurance rates.
    • Fact: If a vehicle has undergone significant repairs or modifications, it can influence its insurance rates. It’s always essential to disclose any significant repairs or changes to the vehicle when getting a quote.
  19. Lapse Myth: A brief lapse in my insurance won’t affect my rates.
    • Fact: A lapse in coverage, even if it’s short, can lead to higher premiums in the future. Insurers often view lapses as increased risk.
  20. Brand Myth: All insurance companies offer the same rates and coverage.
    • Fact: Each insurance company uses its formula to calculate premiums, taking into account various factors. Thus, it’s beneficial to shop around and compare rates and coverages from multiple insurers.
  21. Immediate Coverage Myth: I’m covered immediately after an accident, no matter the circumstances.
    • Fact: Your insurance might have conditions or exclusions. For instance, if someone else was driving your vehicle without permission or if the driver was under the influence, coverage may not apply.
  22. “Full Coverage” Myth: “Full coverage” means I am covered for everything and anything.
    • Fact: There’s no policy that covers absolutely everything. “Full coverage” generally refers to a combination of collision, comprehensive, and liability coverage. It’s important to understand the specifics and limitations of your policy.
  23. Policy Transfer Myth: If I sell my car, my policy can be transferred to the new owner.
    • Fact: Car insurance policies are individualized. When selling a car, the new owner must obtain their own policy.
  24. Occasional Driver Myth: Naming someone as an occasional driver on my policy will mean they’re covered for regular use.
    • Fact: Occasional drivers are expected to drive the vehicle infrequently. If they become the primary driver without informing the insurer, it could result in a denied claim or policy cancellation.
  25. Unlisted Driver Myth: Unlisted drivers in my household are automatically covered.
    • Fact: If someone in your household frequently drives your car, they should be listed on your policy. Not listing them might result in denied claims if they’re involved in an accident.
  26. Theft Coverage Myth: Any car theft, regardless of the circumstances, is covered.
    • Fact: If it’s found that you’ve left your car unlocked or keys inside, the insurance might not cover the theft.
  27. Minimum Coverage Myth: Having the minimum required insurance is always enough.
    • Fact: Minimum coverage meets legal requirements but might not fully protect you financially. It’s wise to evaluate your needs and consider additional coverages.
  28. Out-of-Province Myth: My auto insurance is valid everywhere in Canada without any changes.
    • Fact: While your insurance is generally valid across provinces, each province has its insurance requirements. If you move, you’ll need to adjust your policy to meet the local requirements.
  29. Personal Use Myth: My personal car insurance will cover me if I use my car for business.
    • Fact: If you use your car primarily for business purposes, such as deliveries or transporting goods, you might require commercial auto insurance. Using a personal vehicle for business without informing the insurer might invalidate a claim.
  30. Lower Value, Lower Premium Myth: If my car’s value decreases, my insurance premium will automatically decrease too.
    • Fact: Car depreciation is just one of many factors determining your premium. Other factors, such as your location, driving record, or changes in local regulations, can also impact your rate.
  31. Color Affects Rate Myth: The color of my car, especially if it’s a “sporty” color like red, will significantly affect my insurance rate.
    • Fact: Insurance companies focus on the make, model, age, engine size, and other factors of the vehicle, rather than its color.
  32. Small Claims Myth: I should avoid making small claims to keep my rates down.
    • Fact: While frequent claims can affect your rates, a single minor claim might not have a significant impact, especially if you have accident forgiveness or a good claims history.
  33. Immediate Rate Increase Myth: My rates will increase immediately after I make a claim.
    • Fact: Rate adjustments typically occur at policy renewal. The impact of a claim on your premium will depend on the claim’s nature and your insurance company’s guidelines.
  34. Older Drivers Myth: Older drivers always pay higher insurance premiums.
    • Fact: While seniors might see rate increases due to perceived higher risks, many insurance companies offer discounts for mature drivers, especially if they have a long history of safe driving.
  35. Safety Features Myth: Modern safety features in my car guarantee a lower insurance rate.
    • Fact: While many insurance companies offer discounts for specific safety features, having them doesn’t automatically guarantee a significant rate reduction. The overall rate will still be influenced by numerous other factors.
  36. Claim Responsibility Myth: If someone hits my parked car, it will count as a claim against me.
    • Fact: If your car is hit while parked and you’re not at fault, and the responsible party is identified, the claim should not count against your record.
  37. Multi-Car Discount Myth: If I have more than one vehicle, I will automatically get a multi-car discount.
    • Fact: While many insurers offer multi-car discounts, you typically need to insure all vehicles under the same policy to qualify.
  38. DUI One-Time Impact Myth: A DUI/DWI will only affect my insurance rate once.
    • Fact: A DUI/DWI can impact your rates for several years. It’s considered a significant risk factor, and drivers with a DUI/DWI on their record can expect higher premiums.
  39. Repair Shop Myth: I must use the repair shop recommended by my insurance company.
    • Fact: While insurance companies often have preferred repair shops, you generally have the right to choose where you’d like to get your car repaired.
  40. Automatic Renewal Myth: My policy will always automatically renew at the same rate.
    • Fact: Insurance companies usually re-evaluate risk and adjust rates at renewal. While you might receive an automatic renewal offer, the rate can change based on several factors.
  1. Gender Myth: Men always pay more for car insurance than women.
    • Fact: While it’s true that, historically, young male drivers have often faced higher rates due to statistical evidence of higher risk-taking, gender isn’t the sole determining factor. Location, vehicle type, driving history, and age are all taken into account.
  2. Sports Car Myth: Driving a sports car will always increase my insurance rates.
    • Fact: While sports cars can lead to higher insurance costs due to the potential for high-speed driving, the rate is also influenced by the driver’s history, the car’s safety features, and other factors.
  3. Parking Ticket Myth: Getting parking tickets will raise my insurance premiums.
    • Fact: Parking tickets do not directly impact car insurance rates. However, unpaid tickets can lead to license suspensions, which in turn can affect insurance premiums.
  4. Marital Status Myth: Being married doesn’t affect my insurance rate.
    • Fact: Many insurance companies offer reduced rates for married individuals. Statistically, married drivers tend to be involved in fewer accidents than single drivers.
  5. No Fault Insurance Myth: With “no-fault” insurance, I won’t be held responsible for an accident.
    • Fact: “No-fault” insurance means your own insurance company covers your injury claims regardless of who’s at fault. It doesn’t mean that drivers are never determined to be at fault for an accident.
  6. Educational Level Myth: My educational level doesn’t affect my insurance rate.
    • Fact: Some insurance companies consider education level and occupation when determining rates, believing there might be a correlation between these factors and driving habits.
  7. New Car Myth: A brand-new car will always cost more to insure than a used car.
    • Fact: New cars might come with safety features that can lead to discounts, potentially offsetting the increased cost of insuring a more valuable car.
  8. Defensive Driving Myth: Taking a defensive driving course once will permanently lower my rates.
    • Fact: The impact of a defensive driving course on insurance premiums can be temporary, and the discount might need to be renewed by retaking the course after a few years.
  9. Domestic vs. Imported Myth: Domestic cars are always cheaper to insure than imported ones.
    • Fact: Insurance rates depend on repair costs, parts availability, and the vehicle’s safety record. While some imported cars might be more expensive to insure, it’s not a blanket rule for all domestic vs. imported vehicles.
  10. Lender Requirements Myth: If I’ve paid off my car, I don’t need full coverage anymore.
    • Fact: While lenders often require comprehensive and collision coverage for financed vehicles, it might still be wise to maintain such coverages even after your car is paid off, depending on its value and your financial situation.

Understanding the intricacies of car insurance is vital. Assumptions or myths can lead to inadequate coverage or missed savings. It’s always beneficial to have open conversations with insurance professionals and conduct regular policy reviews to ensure optimal protection and value.

About the Author: Valerie D. Hahn

Valerie is an insurance editor, journalist, and business professional at RateLab. She has more than 15 years of experience in personal financial products. She strives to educate readers and ensure that they are properly protected.

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