Understanding how auto and home insurance works can be tough, especially in today’s day and age where there is so much information readily available on the internet. And to make matters a little more confusing, sometimes with all the information it can be hard to differentiate between fact and fiction.
Luckily, Ratehub.ca is using the results from a recent survey to help Canadians understand insurance a little better.
But before we get into understanding auto and home insurance a little better, let’s look at some of the findings from the survey – which polled more than 1,000 Canadians – and debunk some common myths.
The survey also identified the top five auto and home insurance myths. These myths are outlined below.
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Top five auto insurance myths:
- 46 per cent of Canadians said they believe their gender does not affect the price they pay for car insurance – this is false. Insurers use historical data to determine on average, male drivers are riskier drivers than women.
- 42 per cent believe it does not matter how often they drive, as they pay the same as everyone else – this is also false. Ratehub.ca notes that, according to insurers, the more time drivers spend on the road, the more likely they are to get into accidents.
- 39 per cent of Canadians believe their postal code doesn’t affect their car insurance premium – also false. Car insurance rates are generally higher in more densely populated areas. With more people, according to Ratehub.ca, chances are higher that drivers will get involved in collisions or have their cars vandalized or stolen.
- 36 per cent believe getting parking tickets affects how much they pay for car insurance – this is false. Parking tickets don’t affect your driving record or insurance rates.
- And 22 per cent (or one in five) of Canadians said they believe the colour of their car impacts the price they pay for car insurance – false. The colour of a car has no effect on a driver’s insurance premium.
Top five home insurance myths:
- 46 per cent of Canadians said they believe renting out their home via Airbnb would not impact the price they pay for home insurance – false. According to Ratehub.ca, using a home for Airbnb changes a homeowner’s risk level, so insurers may charge more for coverage or in some cases, even void an insurance policy.
- 34 per cent said they believe the construction materials used in their home would also not impact what they pay – false. Construction materials including wood, brick, cement, etc., can affect what a homeowner pays for insurance.
- 28 per cent of Canadians believe their postal code does not affect what they pay for home insurance – like auto insurance, this is also false. Having a home in an area with many insurance claims – eg. for break-ins or vandalism – can raise rates.
- 27 per cent of Canadians believe if their home was flooded, all damages and losses would be covered under most home insurance policies and another 23 per cent said they weren’t sure – this is false. As noted by Ratehub.ca, to get covered for overland flooding or sewer backup, homeowners need to buy endorsements – or add-ons – to their policies.
- And 22 per cent believe the total value of their jewellery or fine art would be covered by most home insurance policies (another 27 per cent said they weren’t sure) – false. Most policies have maximum claim amounts for valuables such as jewellery or fine art. In order to get more coverage, homeowners need to buy endorsements.
Now, let’s why some Canadians believe some of these myths, how people can stay informed, as well as some ways you can save money on insurance.
Recently, inhalton.com sent some questions to Ratehub.ca, via email, which were answered by Matt Hands, Senior Business Unit Manager of Insurance at Ratehub.ca
Why do you believe Canadians have so many misconceptions when it comes to home and auto insurance?
There are so many different factors that go into determining your insurance premium and no two insurance companies rate you completely the same.
Because of this, insurance pricing can seem like a very complicated topic to the average Canadian consumer, making it easy to believe insurance myths as truths. It’s important that as consumers we educate ourselves and ask questions because not knowing can actually impact whether you have the right coverage and the best rate.
How can we work to inform people about these misconceptions?
In order to help educate Canadians about insurance, we need to make more information available to them around how pricing works.
As an example, when certain information is requested in the insurance quoting process, there isn’t really an explanation as to why the insurance company needs it and how that information impacts the rates you get. Information specific to this should be provided to help consumers better understand how it all works and what factors actually hold weight when it comes to insurance pricing.
We actually designed our auto and home insurance quoting tools to help educate and inform consumers through the whole quoting process and hopefully along the way we can shatter some of these long-held myths around insurance pricing. We also hope that the results of our survey help to set the record straight when it comes to misconceptions – and maybe even open up a dialogue amongst Canadians.
Why is it important to separate fact from fiction when it comes to insurance?
It’s important that as consumers we know how insurance pricing works. Some of the common myths out there can really impact whether or not you have the proper coverage you need and the best rate available to you.
Make sure you educate yourself, do your own research and don’t be afraid to ask your insurance provider questions. You don’t want to be in a situation where you don’t have the right insurance coverage or where you’re paying more than what you need to.
What are and how are insurance premiums are calculated?
An insurance premium is the amount of money you pay for your insurance policy. Insurance companies consider a lot of different factors when determining insurance rates. For auto insurance, this includes things like your vehicle’s make, model and year, your driving history, how much you drive and where you live. For home insurance, some of the bigger factors are location and the replacement value of your home.
Note, no two insurance companies will rate someone completely the same.
What are some tips for Canadians who are trying to save money on insurance?
Our biggest tip for saving money on insurance is to shop around and compare rates.
Another big tip is bundling your insurance products. Most insurers offer discounts when you have both your home and auto insurance with the same company.