Wheels spoke to RDA Insurance to find out some of the biggest misconceptions clients often have about insurance.
RDA Insurance has been helping people and businesses in Ontario get the best rates in personal and commercial insurance for over 30 years. Their customers are able to find the best combination of coverage and price in two ways: shopping online through their website (https://www.shopinsurancecanada.ca/), and by providing professional advice and service through RDA’s brokers. Recently, Wheels sat down with one of RDA’s personal insurance brokers, David Ferrone. He told [Wheels] common misconceptions clients have about car insurance: “I often have clients call me and ask me if certain aspects about their car, location, or tickets affect their insurance rate. Most of the time these questions are just myths or outdated information.”
Here is a list David helped [Wheels] compile of common misconceptions people have about what affects their insurance rates. [The rest of the article is written from the perspective of Wheels writer Amandalina Letterio]:
• Red cars are more expensive to insure – FALSE
For years, I have thought the colour of my car would affect my insurance rate. When I bought my Jeep, the colour red was completely off the table because the common assumption was that it would increase my insurance cost. David told me I was completely wrong, “It’s funny how often people call me and ask me if their new red car is going to cause their insurance rate to rise. We don’t even ask about car colour when someone is looking for a policy. The colour of your car has nothing to do with your insurance.”
• You immediately get a discount on insurance if you have winter tires – FALSE
In early 2016, an Ontario law was introduced that forced insurance companies to give their clients a discount for having winter tires. However, companies don’t always add the discount to your account immediately. It is your responsibility as the client to call your company and tell them that you own winter tires and ask them to apply the discount.
• Removing demerit points from a ticket means your insurance rate won’t change – FALSE
People think that when they fight a ticket and have the demerit points removed, it won’t affect their insurance. Driving tickets are rated under minor or major depending on the severity of the offense. “Fighting demerit points only reduces the chance of your license being suspended,” Ferrone pointed out, “Demerit points do not affect your rate. The severity of the ticket affects your rate. Still, a minor ticket would cause less of an increase on your insurance rate than a major ticket. For example, if you got a ticket for doing 50km over the speed limit, it’s a major offense. If you can get that ticket reduced to 49km over the speed limit, it would then be considered a minor offense causing less of an insurance rate increase than the major offense would have.”
• A cancellation for non-payment does not affect your insurance rate – FALSE
A lot of people don’t realize that if you’re cancelled by your insurance company for non-payment (you missed a few payments) it is a ratable offense that affects the premium. A non-payment cancellation can raise your premium by $250.00 annually and having several can make you ineligible to be insured by some companies. Being cancelled for non-payment can also have a negative effect your credit score.
• Insurance rates are the same in every city – FALSE
Your insurance rate depends on a lot of things, but it’s not quite as simple as which city you’re living in. It actually gets calculated based on your postal code. Certain postal code locations are closer to streets/intersections that have more traffic or a larger population which impacts your insurance rate.
• Putting your son/daughter’s car under your name will make the insurance cheaper – FALSE
People think that putting a car in someone else’s name will change the premium. “Parents often call me thinking that if they put their child’s new car under the parent’s name will be a cheaper premium. The premium is based on the driver of the vehicle, not the owner. Therefore the premium would be the same.”
• Every Accident Affects Your Insurance Rate – FALSE
“Clients think that every accident affects their premium. Only at-fault accidents cause your rate to change. Whether you are 1% or 100% at fault the accident has the same negative affect on your insurance. If you are not at-fault, the accident does not affect your premium.” For example, getting rear-ended won’t affect your premium at all; it only affects the person who hit you. Your rate will stay the same because you are 0% at fault.
• Every company gives you one accident forgiveness “pass” – FALSE
Each company offers an accident waiver endorsement. It protects your record if you get into an at-fault accident. Basically the company gives you one pass for one accident which will not go on your record, “A lot of clients don’t realize that this only protects your record with that current company. When switching to another company, that accident has to be accounted for and will affect your rate.”
• You must report every car accident to the police – FALSE
“Clients will call me almost as soon as they get into an accident and ask if they should go to a collision centre or if they should contact the police. Unless the accident caused $2000.00 or more in damages, you are not expected to call the police.”
• It costs money to use an insurance broker – FALSE
This is actually something I personally didn’t know. I asked David how much it costs for clients to get their plans through an insurance broker and he said, “Nothing. The client doesn’t pay for our service; insurance companies do. It’s our job to find clients the best premium by searching the market and it’s our job to be available to give clients guidance and advice – free of cost.”
Hopefully this article helps you if you are currently shopping the insurance market!