10 Common Home and Auto Insurance Myths

September 9, 2015

10 Common Home and Auto Insurance MythsChances are you’ve got insurance. Whether it’s auto insurance or home insurance, it’s probably safe to assume that almost everyone has one or both of these types of policies. Yet, for something so common there are a whole lot of insurance myths out there.

The problem with myths is that they can end up costing us more money or misleadingly influence the decisions that we make.

Common Auto Insurance Myths

These popular auto insurance myths have some real staying power.

1. The colour of your car affects your insurance rate.

False, it does not. This is why Comparasave.com doesn’t ask you about the colour of your vehicle when you’re comparing auto insurance quotes. We want to give you the best, most accurate, auto insurance quote possible and car colour has nothing to do with it.

2. My postal code does not affect my car insurance rate.

False. Where you live does affect your rate. Some neighbourhoods have higher incidences of theft and/or collisions which means some areas are more expensive to insure a vehicle.

  • Tip: If you’re planning on moving, of course you’ll have to tell your auto insurance provider, but you’ll also want to make sure they still offer you the best rate and shop around.

3. If a friend drives my car and causes an accident, it won’t affect my car insurance rate.

False. Generally, when you lend your car, you lend your insurance too. It is typically the vehicle owner’s insurance company that handles any accidents involving that vehicle.

4. My loyalty discount offsets any savings I would get by changing insurance companies.

Maybe, maybe not. While switching insurance providers would mean losing your loyalty discount, having this discount doesn’t necessarily mean you’re getting the best rate available. Rates often change and another insurer may offer you a rate that gives you better savings than any loyalty discount you may have.

5. Thieves target new cars.

Not necessarily. Sure, there are some thieves who will go after new cars, but statistics from the Insurance Bureau of Canada suggest that older cars are more likely to be a target.

Common Home Insurance Myths

Like auto insurance, home insurance isn’t without its own fair share of myths.

6. Home insurance covers maintenance.

No, it doesn’t. Home insurance won’t provide coverage for upkeep. If your roof is old and needs replacing your home insurance policy will not cover the costs of getting a new roof.

7. My home should be insured for its market value.

Your home should be insured for the cost to rebuild it not for what you’d be able to get for it if you sold it. Remember, market value takes into consideration the land that your home is on and its location, both of which will still be there even if there is a catastrophic loss like a fire.

8. My home business is covered by my home insurance policy.

It depends. Does your home insurance provider know you have a home-based business? A home-based business is not automatically insured under your home insurance policy. If you operate a home-based business you’ll want to chat with your home insurance provider to make sure they know about the business to ensure you have the coverage you need.

9. By law I must have home insurance.

Home insurance is usually a requirement of a mortgage lender, but if your house is paid in full and you own it outright you are not required to have home insurance. However, it’s risky not to. Could you afford to rebuild if there was a fire? Could you afford the outcome of a lawsuit if someone slips and falls on your property? If you’re like most Canadians, the answer to these questions is probably a no, which is exactly why home insurance is considered vital.

10. All homeowner’s insurance policies are the same.

Home insurance policies can vary significantly in what they cover, don’t cover and how much coverage (e.g. policy limits) is available.

The Biggest Myth Of Them All: Insurance Rates Are All The Same

Whether it is home insurance or auto insurance, rates can vary significantly from company to company, and from year to year. At least once a year around renewal time, compare rates because if you don`t you could end up overpaying for the coverage you need.