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Car Insurance Myths Debunked

June 27, 2019

A red car on the road heading into the sunset.There’s a lot of information and perceptions about car insurance out there; some are considered fundamental truths while others, when looked at more closely, often reveal that what we think to be true is simply a myth. The trouble with insurance myths is they can cost us money, or influence decisions we make.

1. Red cars are more expensive to insure

This is false. It is the make, model and year of your vehicle that will affect your insurance rates. Rates charged, contrary to popular belief, do not stem from car colour. Instead, it’s the vehicle’s claims history and average repair cost—not to mention its popularity with thieves—that affects the premium price. In fact, insurance companies don’t even ask for car colour when providing quotes or building a policy.

2. New cars are more attractive to car thieves

False, in fact, statistics from Insurance Bureau of Canada’s (IBC) top 10 most stolen cars reveal that older cars are more likely to be stolen, contrary to the perception pervaded by the myth.

3. If my car is stolen, I’ll be covered

Not necessarily. This is only true if you have purchased comprehensive coverage, an optional coverage. Comprehensive coverage, if you have it, will pay for damages that are not caused by a collision—things like theft, vandalism, fire, hail and even some damages that involve wildlife.

4. If I cause a collision, the damages to my car will be covered

Again, not necessarily. Damages to your car may be covered, but only if you’ve purchased collision coverage which is optional. Collision coverage will pay for damages caused by a collision that you are wholly or partially at-fault for having caused.

If you are 100% not at-fault for the collision, the damages will likely be covered (even though you may not have collision coverage) through another component of your policy.

5. My loyalty discount offsets any savings I would get by changing insurers at renewal

This is likely false. Switching insurers may cause you to lose your loyalty discount (if in fact you receive one) but that doesn’t mean you’ll pay more for your car insurance. The fact is, some insurance companies may provide a small discount on your premium if you’ve been with them for a long time, but that discount may be insignificant if another company has a rate for you that is considerably less than what you’re currently paying. After all, what good is 5 percent off an annual rate of $1,500 (a $75 savings) if you could pay $1,200 with another company?

6. Your auto insurance policy is locked in for the year

Again, false. If you shop around mid-policy and find a better-priced policy, you can cancel your policy before its renewal. However, cancelling your policy before it’s up for renewal may mean you have to pay a cancellation fee. As a result, you’ll want to ensure that the savings are worth more than the cancellation fee. If they’re not, it may be best to wait until your policy is up for renewal, at which time if you cancel, there is no fee or penalty.

7. Higher rates mean more coverage

False again. The rates charged by different insurance companies to insure the same driver, with the same car, for the same exact coverage, can vary by hundreds and even thousands of dollars. Each provider uses their claims experience to determine premiums charged and each company will have a different outlook on a person’s driving history and car combination. As a result, you’ll want to make sure you’re with the “right” insurance company; shop your rates, at minimum, every year.

8. No-fault insurance means “It’s not my fault”

True? False. There’s always fault assigned in an accident. Whether it is all assigned to one person or it’s shared will depend on the collision. No-fault insurance only means your insurance company pays for your damages. If you are in any way responsible for the accident, then chances are you’ll see an increase in your car insurance rates. On the other hand, if you are 100% not at-fault for the collision, your rates won’t likely increase—even though your insurer covered the damages.

9. Males pay more than females for car insurance

This too is false…to an extent. Males under 25 tend to pay a lot more than female drivers of the same age. However, once a driver is 25-years-old, gender is usually no longer a rating category; hence males and females over 25 with the same car and driving history may receive the same rate.

10. All car insurance companies will charge you about the same rate

False. The rates charged by different car insurance companies to insure the same car and driver, for the exact same policy, can vary by hundreds and even thousands of dollars, so it pays to shop around.

11. If I have tickets and accidents, I will always pay a lot for car insurance

This isn’t entirely true. While you may pay more for insurance than someone who has no tickets or accidents, if you shop around you might be surprised to find another insurance company that’s more forgiving of an occasional accident or ticket. Also, tickets usually affect your insurance rate for three years and accidents about six years. Drive better today, and you’ll be investing in lower premiums for the future.

12. If a friend drives my car and causes an accident, it won’t show up on my insurance

False. Insurance coverage is tied to the vehicle and not the person driving it. Therefore, it’s always best to remember that if you lend your car to a friend, you are also lending them your insurance.

13. Your auto insurance rate will increase if you shop around

This is a common misconception. The fact is, your auto insurance rate will not increase just because you’ve shopped around for a better rate. You’ve got nothing to lose, only money to save, by shopping around for your coverage.

Article updated regularly to ensure accuracy.

  • Kevin Smythe

    Don’t believe that insurers don’t ask for car color. They do ask for the VIN before they give you a final price, and the color is coded into the VIN.

  • John Stephan

    I agree Kevin, thanks for bringing that to light.

  • j

    Colour is not in the vin. That is false.

  • John Stephan

    BTW this is the last time I will post anything on this provider’s comment section for any story. This provider (Disqus) sensors valid opinions and observations.

  • http://batman-news.com Bill Downie

    poor insurance companies-they have been ripping off Ontario customers for years and if they say they are not making money that’s a line of bullshit. They do discriminate to males under 25 and also young females. Everyone should get a chance starting off they need a fair price if they can even afford a car in these times of no jobs for young people . Some of the quotes for young guys is absolutely extortion.

  • Derek

    Yes it is in the vin all those numbers stand for something like model year color everything is in that number

  • Chris

    The other day while driving through Scarborough on the 401 for about 20 minutes I observed 3 bikers at different times speeding near 150-160 kmh, just saying.

  • dollybud

    NO it is not in the vin. It’s normally on the drivers doorpost under a different tag. You can google is colour listed on vins or decoding vins and colour is not represented.

  • Frank

    What do you mean?

  • Verna

    Is standard drive less attractive to thieves?

  • Jc

    Ohh yess it issssss! The Vin tells you colour, year, type, where it was assembled, etc… Its like a Bar code for cars, just u cant scan it .

  • Animal

    Yes and no.
    If a car thief drives standard, it will not make a difference.
    If a car thief doesn’t drive standard, it stands to reason that s/he would rather steal a car with an automatic transmission.

  • Animal

    It’s not discrimination. Young drivers are a bigger risk than experienced drivers. And young male drivers are a bigger risk than young female drivers.
    Of course, not in *every* case, but when young girls make insurance claims, it’s usually for a small dent in the fender or bumper caused by a parking-lot mishap.
    When young males make an insurance claim, it’s because they’ve wrapped their car around a telephone pole.
    Young males are generally bigger risk-takers than young females.

  • Animal

    The insurance companies don’t care one whit what colour your car is.
    And what happens if you decide to paint your car a different colour? Does the VIN number change?

  • Michael_Jamieson

    So you pay $1000 a year for insurance, okay, highly unlikely that it’s that low but for the purpose of my comment, it is, and you don’t have an accident, your thousand dollars is gone, but if you do have an accident or tickets, your rate goes up. Does your rate you go down if you don’t have a ticket or accident ie; there should be a rebate every year for claims
    free driving, why should they have the benefit of always raising rates?

  • rick

    if both names are on the policy and your car is stolen who is the cheque made out to………..both or owner of the car ?

  • http://www.insurancehotline.com/ InsuranceHotline.com

    The payment would likely be made payable to both names since the contract (policy ) is in both names.

  • http://www.insurancehotline.com/ InsuranceHotline.com

    No. The VIN number never changes and Insurance companies don’t charge a premium based on the colour of your car.

  • Kevin Smythe

    There are a few characters reserved for “physical characteristics”. It’s deliberately vague. And yes, the colour can be hidden in there. It may not standard for all manufacturer, though, but most do include it.

  • Bhavesh Nandha

    As you said, insurance travels with car, not owner. What if i sell/buy car with very bad accident history? does new owner pay for that accidents? (All less than 6 year old accidents)

  • Bhavesh Nandha

    When shopping around, usually companies ask were “YOU” involved in accident? they are not asking were “YOUR CAR” involved in accident. So in case of my friend accidents my car, better I change company?

  • Toni Hornbaker

    We have been with our insurance company (secura) for 25+yrs and we got a 31% increase in our policy this yr, we both have clean driving records, no claims ,same car and this is their thanks for being loyal customers ?

  • InsuranceHotline

    nice Bob – mind if we use this on insurancehotline as a testimonial?

  • D m

    Unfortunately because they can… Btw – rates can be that low.., I’m 38, my wife is 38 and we have 2 vehicles. 2014 highlander and a 2013 A5 Cabrio – our monthly rate with TD Meloche Monnex is $165 – meaning annually, about $2000 for 2 cars.

  • BuckDSystem

    What town?
    Not Brampton, that’s for sure.

  • BuckDSystem

    No it is not. Show us the 17 digit VIN. Which character designates colour? Usually the first 12 digits each represents something and the final 5 are sequential.

  • BuckDSystem


  • BuckDSystem

    Why do you guys keep saying such stuff? Show us the VIN decoded then. Come on!

  • Sparky Mahoney

    Christ, when the mob engages in practices like this its called “racketeering”,. That’s what insurance is. The biggest legal scam going!

  • Bob

    I don’t know about anyone else but I disagree with young males having to pay more than young females in terms of their insurance rates. Yes, the supposed statistics show young males drive more recklessly than females, however it should be based on the person, not their gender. If a person has been proven to drive more recklessly, then fine. But if that person is a safe driver, and a MALE, why is his insurance rate higher or the same to say a supposed reckless FEMALE driver? This is a stupid scam that these insurance companies create to steal more money.

  • Cecil

    Ontario is moving to add a neutral gender to driver’s licenses. What will happen to the insurance rates of a person born male, who identifies as intersex? I bet the insurance will not decrease!

  • Rudi

    Young female drivers are no more safe than males, that’s an absolute myth. For example, by far more domestic violence against children is committed by women, it’s simply an old bias.

  • Rudi

    The vin includes engine size etc, the make, model, year, colour and drive system if models are different.

  • BuckDSystem

    17 digit VIN has no digit for colour. Why do people keep saying it does? It doesn’t. Which digit is the colour code? Why do people keep spreading false info? This was the point of the article. To debunk myths. Oh, the irony. We have all just read the article, and dozens of comments, and, apparently, a lot of folks still haven’t learned anything.

  • BuckDSystem

    If the car is stolen to be shipped out of country to places like Eastern Europe, the middle east, or Africa, then a manual would be preferable. The USA and Canada are the only two countries in the world, where, apparently, the citizens have not been able to learn how to move their left foot in conjunction with their right hand. Anywhere else in the world, a 75 year old grandmother is piloting her manual transmission beat up old Fiat along a twisty mountain road without giving it a thought.

  • Rudi

    I actually got the pain code from the dealership. I gave them the gun over the phone and they got it from there. The guy said its in there. Sorry this gets you so worked up ! Lol

  • BuckDSystem

    Yeah, this sounds like a credible source. So which of the 17 digits is it?

  • http://unitedindiainsurance.gibl.in/ United India Insurance

    There is another car insurance myth which is like, If one takes out comprehensive cover, he/she will automatically get ‘driving other cars’ cover, meaning he/she is covered fully comprehensively on any car. The actual fact is, most policies will only provide this benefit in certain circumstances and may not offer it for a number of reasons.

  • Mike

    The stats are true, young males are risk takers compared to young females and thy should pay more. Insurance is tied to the level of risk.

  • InsuranceHotline

    When you compare rates on Insurancehotline.com, we have brokers that we can connect you with.

  • BuckDSystem

    Life insurance companies always charge more for men, also. There would have to be legislation passed across the board making it illegal for insurance companies to charge based on gender, and what would be the point? Insurance companies would still make the same profits by charging women more.

  • Robert murawsky

    Stopped at a light, girl piles into the back of me, while on her phone. My insurance company pays for my car( no fault insurance) when shopping for insurance and asked ever been in an accident, What do I say.

  • InsuranceHotline

    You let a new insurance company know that you had a not at fault accident. The new insurance company will see be able to confirm that once they run your history. You will not be penalized for the accident as your record will show that the damage was repaired under no fault- not collision.

  • Usman SK Muhd

    I have accident while driving on 401 on early morning 4:30 am. spare wheel from a pick up truck smashed my front end but that car ran away ,my car bumper and inside engine damaged badly. I went to body shop they told me that they have to open every thing like radiator etc
    and probably change bumper and radiator and frame.but good part is that my car is running now.
    can I claim to Insurance .
    My insurance details are follows.

    Coverage Details
    Bodily Injury Limit: $ 1,000,000
    Property Damage Included
    Accident Benefits Included
    Uninsured Motorist Included
    Direct Compensation – Property Damage Deductible: $ 0
    44 Family protection Included

    please let me know

  • InsuranceHotline

    You should report the incident to the police but since you do not have collision coverage, your insurance company might not pay to repair your vehicle.

  • Stu T.R.

    Imagine being charging based on race or sexual orientation too. In the EU, insurance is based on your decisions, not generalizations based on what’s in your pants or what gender you identify as. Our system is antiquated.