When it comes to insurance there are a variety of types and two of the most common are auto insurance and home insurance. But as familiar as they are, there are also quite a few common myths associated with them and some of these myths could be costing you money.
Let’s debunk them and hopefully save you money along the way.
Auto Insurance Myths
It’s time to set the record straight on some of the most common auto insurance myths.
- Myth: Red cars cost more to insure than any other colour.
Fact: The colour of your car does not impact your insurance rate.
- Myth: If a friend drives my car and causes an accident, it won’t affect my car insurance rate.
Fact: When you lend your car, you lend your insurance as well. It’s the insurance policy taken out by the owner of the vehicle that will handle any accidents that might occur.
- Myth: My postal code does not affect my car insurance rate.
Fact: Each postal code has its own risk level in terms of theft and accident statistics, therefore some areas are more expensive than others to be insured in.
- Myth: My loyalty discount offsets any savings I would get by changing insurance companies.
Fact: Changing insurance companies would mean losing your loyalty discount but that doesn’t mean you’re getting the best rate available. Shop around because sometimes the savings realized by switching providers outweighs the loyalty discounts you have, if you have any at all.
- Myth: Coupes are more expensive to insure than sedans.
Fact: Just because it’s sporty, doesn’t mean it’s more expensive to insure. What’s important are things like the likelihood it'll be stolen, its repair costs, and how well it protects everyone in the car from injury in a collision.
Home Insurance Myths
With these home insurance myths debunked, you can transform yourself into a confident more knowledgeable home owner.
- Myth: Flood damage is covered by my home insurance policy.
Fact: That depends, on what caused the flooding and your policy’s coverage options.
If, for example, a river breaches its banks and floods your basement, then it’s unlikely you have coverage. But this may soon be changing. This type of flooding is considered overland flooding, and until very recently was not available in Canada. However, in early 2015 two home insurance providers started offering overland flooding coverage.
If you experience water damage from an extreme heavy, torrential downpour (like that time in Toronto in 2013 where a month’s worth of rain fell in a matter of two hours) then you would typically have coverage. And finally, if your water damage is from a sewer back-up—and you have this endorsement on your policy—then yes, you’ll be covered.
- Myth: Jewelry is covered under my home insurance policy.
Fact: In the event of an accident or theft, you do have coverage for your jewelry but most insurance companies set a maximum amount they are willing to pay; a limit of $5000 is typical and usually applies to all of your jewelry combined.
- Related Read: Is Your Jewelry Insured?
- Myth: A home is insured for its market value.
Fact: A home is insured for the cost to rebuild it, not for its market value.
- Myth: By law I must have home insurance.
Fact: If your house is paid in full (without financial assistance or a mortgage), you are not required to have home insurance. However, it is definitely recommended. Not having home insurance puts you at high-risk if an unfortunate event or accident occurs.
- Myth: My home-based business is covered under my home insurance policy.
Fact: If the insurance provider is unaware of the business, you may not be covered. To ensure you, your home and your business is protected give your home insurer a call. You may have to purchase an extension to cover your home-based business.
Remember if you have any questions regarding your auto or home insurance, there is no such thing as being "too informed". Ask questions, and plenty of them. The more you know, the better you are off.