QUIZ: The Top 10 Insurance Misconceptions That Cost You Money
Here’s a quiz to see if you’re paying too much for car insurance:
1) If you've had an accident that you've reported to your insurance company, which situation will cause your insurance rate to increase the most?
a) Writing off a Bentley
b) Having a fender-bender
c) Having a fender-bender, that you paid for yourself
d) None of the above
Answer: (d) None of the above. An accident is an accident, according to your insurance company. And the company will increase your rate accordingly, regardless of whether it’s a fender-bender than you pay for or a total loss.
2) The Ontario government did a rate comparison, using a 23-year old driver with a ticket and an accident, showing the highest to lowest rates quoted from among 52 insurance companies. What would you expect the maximum spread between company rates to be?
a) None
b) $2,000
c) $10,000
d) $15,000
Answer: The answer is (d) $15,000. The lowest rate was $2,051 and the highest was $17,468. Although an accident is an accident according to your insurance company, the rates charged between insurance companies are thousands of dollars apart.
3) Do all insurance companies use the exact same insurance policy and wordings?
Yes
No
Answer: Yes. All insurance policies and wordings are identical. The insurance companies all have the exact same policy to sell. If you pay $1,000 more to another insurance company, you aren't getting any extra coverage. Drivers can decide what limit of liability they want, and whether they want collision or comprehensive coverage, and at what deductibles, but every insurance company offers the same policy. It’s like buying a can of Coke: You can pay a dollar at the corner store, or $4 at a baseball game.
4) Which driving offence will cause your insurance rate to increase the most?
a) Speeding, with two demerit points
b) Speeding, with no demerit points
c) Driving without a seatbelt
d) Not having your insurance card with you
e) None of the above
Answer: (e) None of the above. A ticket is a ticket, according to your insurance company, but the rates charged between insurance companies can be hundreds or thousands of dollars apart.
5) If you get charged with DUI, your licence gets suspended automatically. If you go to court and the DUI charge is dropped, does the licence suspension stay on your record?
Yes
No
Answer: Yes. The suspension remains on your record and will affect your insurance rate by thousands of dollars for 6 years.
6) Are insurance brokers like travel agents who will find you the lowest price from among all the airlines?
Yes
No
Answer: No. There are more than 50 insurance companies quoting car insurance rates in Ontario. Insurance brokers can only quote from the companies they represent, usually 3 or 4 of them. Agents can only quote from one insurance company. Interestingly, you can compare the price of your insurance to an airline ticket. The person beside you could be paying hundreds or thousands of dollars less for the same airline ticket if they don’t price compare.
7) Which would increase your rate the most?
a) If you've had 2 accidents in which you were at fault
b) If you've been in 2 accidents in which the insurance company has deemed you to be 5% at-fault.
c) None of the above
Answer: (c) None of the above. An accident is an accident regardless of the degree of fault, according to your insurance company. Although an accident is an accident according to your insurance company, the rates charged between insurance companies are thousands of dollars apart.
8) Can two insurance companies evaluate the same claim differently?
Yes
No
Answer: No. They all have to use the same Fault Determination Rules.
9) If all insurance companies evaluate the same accident in the same way, what can be the rate difference between insurance companies on renewal?
a) No difference
b) $200 difference
c) Over $2,500 difference
d) Over $10,000
Answer: The answer is (d) Over $10,000.
10) If insurance companies use the same policy, and the same rules to determine fault, are their policy cancellation rules all the same?
Yes
No
Answer: No. Insurance companies have widely varying rules for canceling your policy. One insurance company could get “trigger happy” with 3 minor tickets, while another company wouldn’t cancel your policy for 3 minor tickets and 2 accidents.
Scoring:
7-10 correct answers– Good Work. You know that logic doesn’t exist in the “world of insurance” and rates are all over the map. The only way to find which insurance company has the best price is through the InsuranceHotline.com rate search.
4-6 correct answers – You’re open to illogical arguments, and therefore can benefit from the knowledge gained through this quiz. You are now tempted to check out your insurance rate through InsuranceHotline.com to see how you “scored”.
0-3 correct answers - You are a very logical person, but living in your own “do-it-yourself Disneyland” when it comes to your insurance rate. Statistics show that you are probably spending $780 more than you should be for your car insurance. And you didn’t win at this quiz either.
InsuranceHotline.com is an unbiased, online insurance rate quoting service which directs drivers to the lowest insurance rate based on their driving profile.