Myth #1: Are red cars more expensive to insure?

One of the most persistent myths about car insurance is that red vehicles cost more to insure. That’s just not true.

In fact, none of the information you give your insurer — such as your car’s make, model, year and vehicle identification number (VIN) — tells them what colour your car is.

Car insurance premiums in Canada are influenced by other factors, though, including make, model, price, engine size and the vehicle's overall safety record. The cost to repair the car after an accident will also impact your rate.

And, of course, insurers care a lot about your driving record, how much you use your car, and where you park it.

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Myth #2: Will my credit score impact my insurance rate?

Man Holding Smartphone Showing Credit Score Rating on Screen
Andrey_Popov / Shutterstock

Most insurers use a credit-based insurance score to calculate your premiums, so your credit score can play a role in how much you’ll pay. This varies by province, but Newfoundland and Labrador and Ontario have banned insurance companies from using an individual’s credit score to calculate one’s auto risk.

In short, if you have poor credit and live outside of those two provinces, your premiums can reflect that.

Myth #3: Is insurance cheaper on newer cars?

Is it less expensive to insure new vehicles? It is actually the opposite, since these cars cost more to repair and have higher values than used cars. It will cost the auto insurance provider more money to buy a part for a new car or buy a new replacement model if it is damaged or stolen.

How much will my insurance go up with a new car?

On average, insurance on a newer vehicle will be $100-$200 more per year than on a used counterpart. However, each price varies from carrier to carrier, so it is helpful to compare rates before making a decision.

A way to reduce the premium is by choosing a new car with a high safety rating or equipping the vehicle with anti-theft devices, such as security systems.

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Myth #4: Do older drivers cost more to insure?

It’s actually the opposite. Because drivers over the age of 55 tend to drive less and are generally safe drivers, many insurance companies will offer them discounted rates on auto insurance. They also tend to drive vehicles with better safety records such as sedans, minivans and SUVs.

And, once you retire and are presumably using your car less, your insurer may also grant you a discount. If you’re a safe driver approaching your golden years, talk to your insurer about how they can help you stretch out your retirement income with a lower rate.

Myth #5: Are couples more expensive to insure?

Concerned looking couple sit on couch, looking at tablet and pieces of paper
Antonio Guillem / Shutterstock

Premiums can be lower for those in committed relationships that are living under the same roof. Insurers tend to think that this cohort is less risky than a single person, as they may participate in less risky behaviour like potentially speeding or driving drunk, due to having children.

Also, since the average age to get married in Canada is 30.7, these couples would then be past the age when premiums are elevated since they’ve most likely been driving for a while.

Myth #6: Accidents and tickets affect my car insurance rate forever

You may be relieved to know that tickets only stay on your driving record for three years and accidents for six years. If you keep a clean record for the rest of that period, you should be back to more affordable premiums in no time.

And if you have accident forgiveness on your policy, your first at-fault accident won’t impact your premium in the short term, if there are no injuries.

Myth #7: Are two-door cars more expensive to insure?

Two-door cars do not factor into how a premium is decided by carriers. Instead, a vehicle’s claims history, its likelihood of being stolen, its accident frequency, as well as repair and replacement costs are some of the factors that do play a role in calculating premiums.

Consider this myth busted.

Myth #8: Do all car insurance companies have similar rates?

While most carriers may offer very similar types of coverage, the premiums they charge vary from company to company.

This is because insurers group similar risk characteristics with similar risk groups. Some risk group members may never file an actual claim, while others may make many claims.

If your risk group was responsible for multiple claims with a particular carrier, that company’s premiums may be higher than one with a different experience.

Experts recommend you review at least three different companies’ quotes before selecting an insurance policy. You’ll find there’s actually a whole range of different policies at varying price points, and can lead you to finding better rates on your car insurance.

The best way to save is to shop around before you settle on the right policy for your needs and budget. There are plenty of sites that provide price comparisons to understand what options are available from a variety of carriers. You can also bundle auto and home insurance for extra savings.

The bottom line

Insurance can be difficult to understand, especially for people seeking out a policy for the first time. However, it is important to know that insurance is not a one-size-fits-all solution. Customization is crucial to get the perfect coverage that suits your individual needs and will protect you when life throws unexpected hurdles. Lastly, make sure to weigh your available options to make sure you’re not overpaying on car insurance.

With original files from Sigrid Forberg

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David Saric Associate Editor, Money.ca

A Toronto-based writer and editor with both in-house and freelance experience on a variety of topics, including art, fashion, pop culture, film, television, music, current affairs, breaking news, and managing and money and P&C insurance.

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