4 myths and 4 truths about car insurance

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While some of us may not be driving as often as we used to (due to the pandemic), chances are we’re still paying for car insurance.

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There’s a lot of information (and misinformation) out there about auto insurance — around what affects your rate, and how to go about switching providers. Sometimes, it’s hard to tell the difference between a myth and the actual truth, especially when it comes to insurance.

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4 myths and 4 truths about car insurance Back to video

It’s time to put those myths to bed.

Myth: You pay more for insurance if you have a red car

The insurance industry doesn’t care about the colour of your car. Your premium is not affected by your vehicle’s colour so go ahead and buy that red car.

Truth: The model of car you drive impacts your premium

When determining your premium, insurance companies consider the make and model of the car, how much it costs to repair, and the rate of theft. So if a specific car model has a greater chance of being stolen,  your premium might be higher.

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Myth: You can’t switch insurance providers until your policy comes up for renewal

If you’re not satisfied with your current insurance provider, you can make the switch to a new one at any point in the duration of your policy. In fact, switching could mean savings of hundreds of dollars a year.

Keep in mind that you may have to pay a cancellation fee, which could be a flat rate per month or a percentage of what’s left on your current policy. Whatever you decide to do, make sure to  compare car insurance rates  before you make the switch. You don’t want to leave money on the table when it comes to something as expensive as car insurance.

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Truth: Speeding tickets will raise your insurance rate

While it may not be an immediate increase, it will go on your driving record. When it’s time for your insurance to be renewed, your provider will look at your driving record and likely increase your rate.

It doesn’t have to be a big speeding ticket, either. Just going 15 km/h over the posted speed limit can earn you a ticket and affect your insurance premium.

Myth: Using your personal vehicle for work will increase your premium

This is not the case, though  you should tell your insurance provider  if you plan to use your vehicle for, say, ride sharing or food delivery.

While you might be covered by the ride-sharing company’s insurance when you’re on the clock, it’s a good idea to tell your insurance provider because if you get into a collision, it can be difficult to know which insurance company may be liable. Plus if you don’t, you run the risk of invalidating your personal insurance coverage if you’re using a personal vehicle for commercial purposes.

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There are insurance companies that provide coverage for drivers who use their personal vehicles for commercial purposes.

Truth: Where you live impacts your insurance premium

Location is considered by insurance providers when setting your rate. If you live in an area with high instances of auto theft or in an area where the insurance company has had to pay out a high number of claims, you could very well end up paying more for your coverage — even if you’re a safe driver.

Myth: Parking tickets affect your premium

Those parking tickets in your glove compartment won’t affect your insurance premium, but they could affect your ability to renew your driver’s licence. So it’s still a good idea to stay on top of paying them.

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Truth: How much you drive impacts your premium

Generally speaking, the more often and longer you’re on the road for, the more likely the chances of a collision occurring. The  average yearly mileage for Canadians  is approximately 15,000 kilometres so anything over that might increase your premium slightly.

But the flipside is that mileage also has the power to lower your premium. With pay-as-you-drive insurance, you’re only charged by the kilometre so you have more control over pricing. Similarly, if you opt for  usage-based insurance , and let a telematics device or app record your driving behaviour, you could see a discount on your premium for safe driving. On the other hand, if you have a record of unsafe driving, like speeding, braking hard, or taking unsafe turns, your insurance company could use that data to apply a surcharge to your premium.

LowestRates.ca is a free and independent rate comparison website that allows Canadians to compare rates from 75+ providers for various financial products, such as auto and home insurance, mortgages, and credit cards.