Common Car Insurance Myths ‐ Separating Fact from Fiction

With so many insurance stories from so many different drivers, it's important to know what's true and what's not. We've taken some of the most common myths we've been asked by you and debunked each statement. Now you can find out what factors really do affect your car insurance. Let's get started.

Fact or Fiction?

The colour of your car affects your insurance premium.

This is fiction. The insurance industry is actually colour-blind. For example, a red car does not cost more to insure. In fact, it doesn't matter if your car is red, blue, black, or silver — your insurance premium is not impacted by the colour of your car.

2-door cars are more expensive to insure than 4-door cars.

This is also fiction. Just because you drive a 2-door car, doesn't mean you'll automatically be paying more for car insurance. A 4-door vehicle can, in some cases, be more expensive to insure. This is because when insurance companies determine your premium, they consider multiple factors like the type of car you drive (make, model, year), the price of the car, repair costs, theft rate and its previous claims history, NOT the number of doors your car has.

For example, the premium might be lower on a car that has statistically proven to be less likely to be stolen or involved in an accident. It might also be lower if the vehicle has better safety and handling characteristics or is less costly to repair.

Tip: If you are thinking about buying a new car or you have a specific type in mind, take a look at How Cars Measure Up — an analysis produced by the Insurance Bureau of Canada (IBC). You'll be able to do a comparison between different car models (based on previous statistics) and see if your potential new car may help with a lower premium. You can also check out the list of the top 10 stolen vehicles in Canada that the IBC publishes each year. It may help you choose a car with a lower risk, which should also help in reducing premium costs.

Where you live affects insurance premiums.

This is fact. In Canada, your insurance premium will differ depending on whether you live in an urban, suburban or rural area, and the risk associated with those areas. If, for example, you live in a town/city that's had a higher theft or accident rate, drivers living there may have to pay higher insurance rates due to the higher risk. However, this is only one factor that plays a partial role in your overall premium costs. Just because you live in a higher risk area, doesn't mean your insurance premiums will skyrocket.

People under 25 pay more for car insurance.

This is fact. Generally, being a young or new driver plays a role in determining your car insurance premium . The reason being that a younger age is usually associated with less years of driving experience across the insurance industry. However, due to province-related restrictions, some insurance companies only factor in years licensed, while other insurers must factor in both age and years licensed.

Keep in mind that provincial regulators play a huge role in weighing which factors will impact your premium most. Some other factors that go into consideration are:

  • Your driving history
  • The type of car you drive (make, model, year)
  • What you use your vehicle for
  • How many people will regularly drive the car
  • Where you live
  • The type of coverage you choose
  • Your credit score (province-dependent)
  • Industry-related factors such as markets, inflation, taxes and regulations

Getting a parking ticket affects the cost of insurance.

This is fiction. Parking tickets don't have any impact on your insurance, nor do they affect your driving record. No matter the reason for your parking ticket — whether you parked too close to a fire hydrant or parked in a no parking zone — it won't classify as a "moving violation" (breaking the law while driving), therefore it won't affect your insurance. Generally, tickets that fall under the moving violation category are the tickets that will impact your premiums, such as speeding, distracted driving, stunt driving, etc.

While parking tickets have no impact on your insurance premiums, they can affect you if you have unpaid fines. If you fail to pay your parking ticket(s), you may not be allowed to renew your driver's license or your plate stickers.

Getting a speeding ticket will increase insurance premiums.

This is fact (depending on the type of speeding ticket you received). Speeding tickets issued by a police officer for a moving violation will stay on your driving record for 3 years, which in turn, impacts your insurance premiums. If, however, you were issued a ticket through a speed camera (or an Automated Speed Enforcement (ASE) camera), your insurance premiums won't be affected since the ticket is issued to the registered owner of the car based on the license plate captured in the photo.

You don't have to pay your deductible if the police states the accident wasn't your fault.

This is fiction. Although the police may have deemed you not responsible for the accident, they aren't able to determine whether you need to pay your deductible or not. In fact, each province has their own set of fault determination rules that insurers are required to follow. That means your insurance company (following provincial regulations) will be the only ones establishing whether or not you have to pay your deductible .

Car insurance doesn't cover you if you get into an accident in the U.S.

This is fiction. Your car insurance is valid anywhere in Canada and the United States. That’s why it’s a good idea to carry your proof of car insurance (also known as your “ pink card ”) with you at all times. Depending on your coverage, you and your car should be covered if you get into an accident while in the U.S.

Tip: If you are considering a trip to the U.S. and you don't plan on driving your own car, consider purchasing the Grand Touring Solution®. This coverage will act as an extension of your own car insurance policy and will protect your rental should anything happen to it while in the U.S.