There are many auto insurance myths that people actually think are true. All of these auto insurance myths in this article have been researched to prove that they aren’t true.
Auto Insurance Myths
Many people think that insurance premiums increase everywhere when there’s a natural disaster.
Fact: Natural disasters only increase insurance premiums in the area it happened. Other places may have an indirect impact. Insurance companies’ purchase reinsurance to help cover large losses. Reinsurance companies’ operate around the world. Reinsurance companies’ must pay when there’s a natural disaster. If the reinsurance companies’ predict a year with a lot of claims, they may raise their rates. When reinsurance companies’ raise their rates, insurance companies’ in Canada may have to pay more for reinsurance. Insurance companies’ may raise their premiums if their reinsurance company raises their rates.
Many people think that it’s hard to get paid for a claim.
Fact: Usually, it isn’t hard to get paid for a claim. Insurance companies’ paid over $30 billion in 2013 for claims. These insurance companies’ paid for individuals and businesses to get the care they needed, repair their property and replace lost income.
Many people think that if they have to file a claim that they’ll get less than what they asked for. Many people increase the amount of money they need when they file their claims.
Fact: Asking your insurance company to give you more money than what you need is a crime. Insurance companies’ will pay your claim depending on your policy terms, deductibles, levels of coverage and other factors. An insurance broker may review receipts and other documents to ensure that the customer receives the correct and appropriate amount of money that they’re asking for. Insurance fraud increases claim costs and premiums.
Myth#4: Many people think that if they get injured in an automobile accident that their claims will be paid by the government’s health insurance plan.
- Fact: Car insurance companies’ pay more for claims compared to the government’s health insurance plan, workers’ compensation plans, and private insurance plans. Insurance companies’ pay more than $2 billion for medical costs in Canada. Insurance companies’ pay for claims out of the accident benefits portion of car insurance policies, health care levies, and the tort system.
Myth#5: Many people think that only an insurance company will pay for expensive legal settlements.
- Fact: An insurance company charges every policyholder a premium each month to pay for claims. Expensive legal settlements are paid using premiums that each policyholder has paid. If the cost of claims increases, an insurance company will need to raise their rates.
Myth#6: Many people think that an insurance company frequently changes their policy to reflect what’s covered and what isn’t covered.
Myth#7: Many people think that their premiums shouldn’t increase if they get a ticket for not wearing their seat belt.
- Fact: Insurance premiums may increase if people get a ticket for not wearing their seat belt. People who don’t wear their seat belts are likely to get injured if they get in an accident. Their insurance company will pay for their medical expenses. If their insurance company has to pay for their medical expenses, their premiums will likely increase if they ever get caught not wearing a seat belt.
Myth#8: Many people think that the color of their car increases their premiums.
- Fact: The color of their vehicle doesn’t increase premiums. An insurance company will charge a calculated premium based on the year, make and model of the policyholder’s vehicle. The policyholder’s previous accidents, tickets, how they use their vehicle to commute and more will also be calculated to determine the policyholder’s premiums.
Myth#9: Many people think that their insurance premiums won’t increase if their friend borrows the vehicle and gets in an accident.
- Fact: If a friend borrows the policyholder’s vehicle and gets in an at-fault accident, the insurance company will likely raise their rates. Even if the policyholder’s friend has their own auto insurance policy, the policyholder will still likely see their rates increase.
Myth#10: Many people think that their insurance company will cover the costs of their claim if their vehicle is stolen, vandalized or if they receive damage from a flood or fire.
- Fact: For a policyholder to be covered in these events, they must have purchased comprehensive coverage. Comprehensive coverage isn’t required in Ontario, so some people choose to not purchase it. For a policyholder to be fully covered, they’ll need to purchase collision and comprehensive coverage.
Myth#11: Many people think that insurance companies’ in Ontario are allowed to charge what they want.
- Fact: Insurance companies’ in Ontario aren’t allowed to charge what they want. All auto insurance premiums are regulated by the government. An insurance company is required to submit their rules and rates to the government. The rules and rates must be approved before an insurance company can start changing their rules and rates.
Myth#12: Many people think that parking tickets cause their insurance premiums to increase.
- Fact: Parking tickets don’t cause insurance premiums to increase. People who don’t pay their parking tickets may have their insurance premiums increase.
Myth#13: Many people think that their auto insurance policy will cover their personal property left in their vehicle if the vehicle gets stolen or damaged in an accident.
- Fact: Auto insurance policies don’t cover personal property. Their personal property would be covered under a property insurance policy such as home insurance.
Myth#14: Many people think that their insurance premiums won’t cost as much if they get an inexpensive vehicle.
- Fact: Sometimes, inexpensive cars cost more to insure than expensive cars. Auto insurance premiums are calculated based on the prediction of future claims. An insurance company will calculate the premium based on safety features, the cost to repair the vehicle, the likelihood of theft and the chance of vandalism.
Myth#15: Many people think that their auto insurance premiums will remain the same when they move.
- Fact: Auto insurance premiums may change when the policyholder moves.
Myth#16: Many people think that their auto insurance company will provide them a rental car if they get in an accident.
- Fact: An insurance company won’t provide a policyholder a rental car unless they purchased rental car coverage and they were in an at-fault accident. It’s important that a policyholder adds rental car coverage to their policy if they depend on their vehicle for traveling to and from work.
Myth#17: Many people think that their insurance company won’t cover their claim if they get in a collision with an animal.
- Fact: Vehicle collisions with animals occur four to eight times every hour in Canada. Collisions with animals are usually covered if the policyholder purchased comprehensive coverage.
Myth#18: Many people think that if they get a ticket or get in an at-fault accident that their insurance premiums will always remain expensive.
- Fact: At-fault accidents and tickets only stay on the policyholder’s record for three years. The policyholder will see their rates decrease after their record is cleared.
Myth#19: Many people think that they won’t be able to purchase auto insurance if they have a bad driving record.
- Fact: People who have bad driving records will still be able to purchase auto insurance, but their rates will be expensive. People who have bad driving records may not be able to purchase insurance with big companies, but they should be able to purchase auto insurance through a company that offers high-risk auto insurance. If they can’t purchase auto insurance through a company that offers high-risk auto insurance, they’ll be able to get it through an organization called Facility Association. Purchasing auto insurance through the Facility Association should be the last option.