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The Five Latest Car Insurance Myths [Updated]

October 14, 2015

Insurance MythsShopping for car insurance is complicated enough without running into a lot of false information; yet car insurance myths seem to pop up all the time. To avoid getting caught by one of the latest myths making the rounds, take the time to find out the truth. These car insurance myths are common, but simple to debunk.

Myth: New cars always cost more to insure.

While there is a correlation between the value of a car and the cost of the insurance, a brand new car won’t always be more expensive to insure than a used car, even of the same make and model. New cars usually have more safety features and more advance anti-theft features, which can earn discounts on car insurance and actually bring down rates.

Myth: Lapses in coverage don’t affect rates.

Having a lapse in your auto insurance coverage doesn’t always affect rates, but it certainly can. It depends on the length of the lapse and the insurance companies’ rules. In some cases, a long lapse in coverage can result in increased premiums. Keeping car insurance in force in one place also means keeping discounts such as longevity, so it can bring rates down.

Myth: Switching insurance companies should only be done on renewal.

While switching on renewal is less complicated in some ways and can avoid early termination penalties charged by some insurance companies, often the rate difference can more than make up for that. Shopping around for insurance quotes and switching mid-term is not only possible, it’s sometimes a very good idea and can save a lot of money in the long run.

Myth: Insurance will pay for a new car when it’s totaled in the first year or two.

This is only true if the driver has a coverage known as waiver of depreciation on the policy, and it’s something that must be added. Most car insurance policies do not come with this coverage automatically, so if it isn’t added to the policy even a new car will be covered at a depreciated amount.

Myth: The police report accidents to insurance companies.

When the police are called to an accident scene they take a report, and if necessary will hand out any traffic violations that are involved. But they won’t report it to the insurance company; that is the task of the drivers involved. That doesn’t mean that the insurance company will not see the police report; they will obtain it as a part of their investigation into the accident to help determine fault. Another thing to keep in mind is that the fault of the accident will be determined by the insurance adjuster. The police report will help him or her make that determination.

  • randy

    Intact, my auto insurer, tried various ways to up my premium several times but I was able to get it back to where it was suppose to be. That was until last year when they moved me into a new zone. Of course it was a zone that had higher rates. Just wondering if I have any recourse? Obviously I will be shopping around as I am tired of paying more for a lot less!!

  • InsuranceHotline

    Hi Randy,

    Each insurance company determines their own rates and where you live does play a role. Your best bet is to shop around online for quotes.

    Thank you.

  • InsuranceHotline

    Hi Randy,

    Each insurance company determines their own rates and where you live does play a role. Your best bet is to shop around online for quotes.

    Thank you.

  • Jack T.

    Regarding reporting of accidents to insurance companies, my insurance company knew of my previous vehicle being wiped out by another vehicle crashing into the front end through an Ontario accident reporting centre as the company has someone who checks the centre’s files every morning. I hadn’t yet notified the company as the other driver accepted responsibility and was making a cash settlement at above market value for my vehicle. The company phoned me to compare my version of the collision with what the other party had filed at the collision centre. My insurance coverage was not affected.

  • Jose

    What’s the cost of car insurance for a new 26 years-old driver?

  • beatles64

    Still a scam.

  • Katherine.Iles

    Hi Jose,

    Please click the link below and follow the steps. We can get you insurance in a matter of minutes! Let us know if you have questions. https://www.insurancehotline.com/

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

    You can get a quote on our site

  • eirescott@gmail.com

    You say lapse in insurance can matter and depends on the insurance companies rules. This is bordering on a lie and is misleading. Legislation dictates what the rip-off car insurance companies can do and it has left a loophole for these pricks to use to overcharge if you haven’t had continuous rates due to a missed payment. Not having insurance for a few years because you choose not to drive (a lapse) is not supposed to affect your rates; but insurance companies look to charge a LOT more when this happens and do everything they can to make this extra cost happen. Insurance companies are NOT your friend; shop around and take the best price you can get. Fight their fascist greedy nature – Like Lee Romanov USED to do – and don’t let them rip you off any longer. Speak directly with your MP demanding changes that will allow us to have fair rates and not rates that help finance multiple homes in exotic places of these greedy companies’ CEOs.