Commonly held myths about finances can cost you hundreds, if not thousands of dollars every year. Ratehub.ca conducted a survey of over 1,100 Canadians to debunk the myths and reinforce the truths surrounding home and auto insurance in order to save you money. Here we summarize the findings and show you how to avoid paying too much for insurance.
Over 1 in 5 Canadians thought the colour of their car affects the price they pay for car insurance. This age-old myth is based on the idea of sports cars being red. While an expensive sports car will cost you extra, you won’t pay more to drive the same car in a different colour.
Nearly 20% of Canadians did not know the year, make, and model of their car affected the price they pay for car insurance. While fuel economy is an important factor when buying a car, researching the cost to insure a car may help you make a better financial decision and save you money, especially when looking at hybrid or PHEV vehicles.
36% of Canadians falsely believe getting parking tickets can increase your auto insurance quotes. While parking tickets won’t affect what you pay for car insurance, not paying them could result in a license suspension which, yes, would impact your monthly premiums.
More than half of Canadians knew how frequently you drive affects your insurance premium. If your daily commute to and from work is over 50km, you can expect to pay more than the person who takes public transit and uses their car for weekend errands only. The more you use your vehicle, the chances of an accident increases.
Your postal code is one of the bigger factors insurers consider when they calculate your auto insurance, but surprisingly, nearly 40% of Canadians surveyed had no idea. For instance, a driver who lives in London vs. a driver who lives in Toronto would receive cheaper Ontario car insurance quotes. Insurers use postal codes to group various statistical data points together (claims, accidents, theft, driving infractions & fraud) as an indicator of the type of risk a specific region poses to a driver. The higher the risk the higher the premiums will be in that area. Unfortunately for Toronto drivers the region is considered to be a higher risk to drivers on the road than London.
Lastly, over 10% of Canadians did not know their driving history affects the price they pay. Being a safe and cautious driver on the road will always save you money on car insurance. The longer your driving record stays clean, the more your insurance company will reward you with better pricing.
That’s why it’s so important to understand fact from fiction and to communicate with your car insurance provider – ask for discounts for your clean driving record, tell them you bought winter tires, and if you stay with them for a while, inquire about a loyalty discount. The more questions you ask and the better you understand insurance pricing factors the more you can save.
A postal code also affects your home insurance quotes, but more than 1 in 4 Canadians thought a postal code had no affect on their home insurance pricing. Living in an area where theft or vandalism is common will increase your premium. Living far away from a fire hydrant reduces the chances of extinguishing a fire quickly which would increase the cost of the claim you’d submit. With this in mind, 65% of those surveyed knew having a fireplace in their home would increase their premiums and now you know why that’s correct.
16% of Canadians did not know the size of their homes would affect their premiums. If you’re shopping for condo insurance for a 600 square foot box-in-the-sky, you’ll pay less than someone whose insuring a detached home. A condo’s replacement costs are significantly less than a detached home, and it often has regular maintenance which reduces the chances of a significant repair. Know that an insurance policy is not a maintenance plan. If you try and submit a claim for something that could have been prevented with regular maintenance, you’ll likely be denied.
Accordingly, if you live in a condo made of concrete and steel you can expect to pay less than what you would for a home built mainly of wood, because they are more resistant to fire and built to last longer. The materials used to build your home affect your insurance, but 34% of respondents didn’t know this to be true. Furthermore 38% did not know the cost to rebuild their home would affect their home insurance pricing too.
Knowing the cost to rebuild is very different from the market price of your home. When speaking with your insurance provider, make sure you’re only insured for the rebuilding cost and not the market price. In a hot real estate market like Toronto or Vancouver, the market value could be double or triple the cost of rebuilding. If you’re insuring the market value of your home, you’re probably paying too much.
37% of Canadians did not know that the contents in their home have an affect on the price they pay for insurance. A few important things to note:
If you’re renting out your home using a service like Airbnb, this will increase the cost of home insurance, but 46% of Canadians thought otherwise. First, know that renting out your home needs to be discussed with your insurer because it’s a change to your existing policy. If you don’t inform them and need to make a claim, they could deny the claim and could potentially even cancel your policy for material misrepresentation of facts. There are only a few companies that provide insurance for short-term accommodation, so make sure to check if your insurer is one of them before renting out your home.
There are many factors affecting the price you pay for insurance. Hopefully, we’ve helped debunk some myths or backup the truths. As with any insurance, do your research, be honest, ask questions, and shop around to find the best rates and coverage for your needs.