Did you know: Truth about the most common insurance myths
Comparing and choosing a car insurance policy can be a confusing process. With all the myths surrounding the process, including the following; drivers can become even more easily overwhelmed. Don’t rely on your neighbor or co-worker for insurance information. Here are the truths every driver should know.
“My car is old, I don’t need theft coverage”
In reality, many criminals are attracted to older, trustworthy, popular vehicles, such as a Honda Accord or Toyota Camry. Statistics from the Insurance Bureau of Canada shows that the number of older vehicles stolen is much higher than newer models. Because of the popularity of these cars, there’s a large demand for their parts. The major reason why vehicles are stolen are either for other criminal activities or joyriders
“Parking Tickets will increase my insurance”
Parking tickets will NOT directly increase the rate of insurance you pay. However, not paying parking tickets can result in late penalties which will have to be paid when you renew your license plate or driver’s license. Also accumulated unpaid parking tickets can result if your driver’s license being suspended; which in turn can have an influence on your insurance premium…
“A lower deductible translates to a lower premium”
This can be a confusing aspect to many car insurance policies. For a given insurance claim, there is a portion that you agree to pay (the deductible) and the insurance company pays the rest. If you agree to a higher deductible when purchasing insurance, your premium will be lower. This means that a higher deductible will actually translate to a lower premium. Some companies will allow you to “buy down” the deductible, this means that you pay extra on premium and can have your deductible waived in the event of a claim.
“The iPad in my car is covered by my car insurance policy”
Personal property, such as a tablet, wallet, or even those spare shoes in your trunk are not covered for theft on your car insurance policy. Your car insurance policy will only cover items that are permanently attached to the vehicle. For example, if you could turn your vehicle upside-down, whatever falls out would not be covered. It is always a good idea to ensure you have some sort of property insurance whether you own or rent, a personal property insurance package such as homeowners or tenant’s insurance policies have coverage’s available for theft of your items from your vehicle.
“I paid more for my car, that’s why I pay more on Insurance”
This cannot be more untrue, car insurance companies do not base your rates on the amount you paid for your vehicle, unless you have a collector/classic car. For the everyday “to and from work” vehicle we own; the rates are determined by the loss history of that vehicle, meaning how many claims have been paid out on the model of vehicle you are driving. When you also consider the amount of specific vehicles on the road; some lower priced vehicles would have higher collision rates simply because there or more than double the amount on the road over an expensive vehicle.
“My insurance includes rental car coverage”
This is probably one of the most costly myths in our industry today, loss damage waivers or collision damage waivers are optional endorsements that can be added to your insurance policy. At a rate of roughly $1-$2 per month, most brokers will automatically add this to your policy, but never assume that you have coverage. It is always wise to never expect a coverage to be on your policy without asking or confirming, also be aware that most insurance companies will have a daily limit and/or maximum limit for rental car reimbursement.
“Buying insurance online saves me money”
Insurance is one of those products you purchase but will likely not use right away. However, you are purchasing insurance to protect some of your most expensive assets. When you purchase insurance online you could be missing out on additional coverage’s and discounts available to you that may not be listed. The biggest concern with that is you wouldn’t even know that you may not have the right coverage until you need to make a claim; which of course is too late then. A good insurance broker can help you analyze your current policy and make recommendations so you have the best experience possible when you have to use your insurance.
“If my Car is written off, my insurance company will pay out my loan for me”
When your car is written off; if you have the appropriate coverage the insurance company will pay you the actual cash value of the vehicle at the time of your loss. The actual cash value will be determined by the insurance company adjuster, they will take in to account the year, make, millage, and general condition of the vehicle. Also, the adjuster will source out comparable vehicle in the market and use their sale price as an estimate to value your vehicle. If the determined value of the vehicle is less than the amount owed to the loan, unfortunately you will be responsible to pay the remainder to the bank. There are coverage’s available through Alpine Insurance to add a waiver of depreciation to a new vehicle purchased to avoid having the vehicle appraised at actual cash value. The coverage available can extend replacement cost based on MRSP value or bill of sale value (whichever is less) to the insured vehicle for up to 5 years.
“If I lend my vehicle to my friend and my friend causes an accident, his/her insurance will cover it”
Sorry, but there’s no way to pass this buck. You and your insurance record are both on the hook when you lend out your wheels. Your insurance company pays for your damaged car, the claim is on your policy, and your rate may increase, just as if you had been driving the vehicle yourself. Before lending your vehicle out, be aware of the financial consequences you could face if your friend gets in an accident. This is a good excuse to not lend your truck to your buddy who moves every month!
“A small claim won’t affect my rate as much as an expensive one will”
It seems logical, but remember that insurance rates are determined based on exposure to risk as well as value. Even if your insurance company doesn’t pay out a dime, an accident is an accident and will affect your history and your rate. A lot can vary; depending on the insurer, the circumstances and your previous driving record, but the cost of your claim will not make a difference in the premium they will charge.
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