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There are a lot of misconceptions about how car insurance works. Unfortunately, they can end up costing you money! Here are some popular myths and the reality behind each one.
1. If I’m involved in an accident, my premium will go up.
Not necessarily—but if you’re at fault for the accident, it will probably affect your premium. Sometimes rates go up whether or not you’ve been in an accident. Insurance companies adjust their rates periodically based on inflation, the type and number of claims, accident statistics for drivers with the same car as you and many other factors.
2. If my friend borrows my car and damages it, his insurance will cover it.
Think of your insurance as part of your car. When you loan someone your car, you’re also loaning them your insurance. If they have an accident, there could be consequences. Depending on the coverage you have, it’s usually your insurance company that will cover the damage.
3. People with red cars pay more for their insurance.
The colour of your car doesn’t matter. The same vehicle in a different colour will have the same rate. What does affect your premium is the make, year, model, engine size and body type of your car and the drivers on your policy.
4. I’m under 25, so shopping around for car insurance is a waste of time.
Shopping around can save you money. Premiums are usually higher for young drivers, but a bit of comparison shopping can make a big difference. Most insurers have a variety of rates and savings, including some for drivers under 25. For example, with Desjardins Insurance, young drivers can save up to 20% on their car insurance. Your age is only one of the factors that’s taken into account. If you have a good driving record, you’ll usually get a better premium.
5. Auto insurers can charge whatever they want since rates aren't regulated.
Actually, auto insurance rates are strictly regulated. In Quebec, insurers must submit a copy of their rate manual after it is produced and within 10 days of any changes.
To learn more, visit the Autorité des marchés financiers website.
6. I use my car for work, so I’m covered under my employer’s insurance.
Careful! Your insurance policy covers your personal use of your car, not any commercial use. If you drive your car for work, tell your insurer. They will analyze your situation and tell you if you need commercial vehicle insurance instead. Your boss may be reimbursing you for mileage, but that doesn’t mean you’ll be covered if you have an accident.
7. My rates are similar to my neighbour’s.
Rates are determined on a case-by-case basis. Factors like age, driving record and type of vehicle are taken into account. Each situation is unique, which is why rates vary.
8. With Quebec's no-fault insurance, I’ll never be found at fault for an accident.
Actually, Quebec’s no-fault plan applies to bodily injury only, which is covered by the Société de l’assurance automobile du Québec (SAAQ). Your private insurer will take your fault into account when you make a claim for property damage caused in an accident. If you’re at fault, damage to your vehicle will only be covered if you have collision coverage, and you’ll have to pay the deductible. If you're not at fault, damage to your vehicle will be covered even if you don't have collision coverage, and you won't have to pay the deductible.
9. “All perils other than collision or upset” covers me for everything.
“All perils other than collision or upset” is one type of protection available on a car insurance policy. It pays for damage to your vehicle caused by events other than collision or upset, such as theft, vandalism, glass breakage or hail damage.