After nearly 55 years of service we’ve heard just about everything. What we’ve learned is that there are a lot of misconceptions about the insurance industry. Here’s just a few of them:
Home policies cover EVERTHING!
- WRONG! Well, to be fair the industry may have done this one to itself by naming the most common home policy the “comprehensive / all risk” policy. The truth is even a comprehensive / all risk policy has exclusions. In fact, that’s kind of how it works. Rather than list all the things under the sun that the policy does cover, a comprehensive / all risk policy lists the items that are not covered by the policy.
A landlords policy covers his tenant
- WRONG! One of the basic principles of insurance is that you can’t insure what you don’t own. The landlord can’t insure your possessions and you can’t insure their property either. If you’re renting you need a tenants policy. These provide you with coverage for your personal property and personal liability. The good news is these policies are really affordable. Starting at around $15 per month depending on your needs.
A condo owners policy isn’t required if the condo corporation has insurance
- WRONG! This is perhaps one of the most common assumptions made by condo owners. The reality is that the condo corporation is only required to buy insurance on the condo building / structure, common areas and liability coverage. It’s up to you, the unit owner, to insure your personal contents, your personal liability, and your improvements and betterments that were made to your unit by either you or a prior owner.
Vehicles stored in your garage are covered by your home policy
- WRONG! Remember how we talked about list of exclusions on a home policy? Yep, you guessed it, vehicles are on that list. Cars, Motorcycles, ATV’s, Snomobiles, are excluded because they are better insured elsewhere….. on an automobile policy.
Red cars cost more to insure
- WRONG! 46% of people think this is true (52% women & 48% men)
- The color of your car has no direct impact on insurance rates. However there may be an indirect link. According to a recent study red colored cars came in second for most tickets issued. What color got first? White.
New cars always cost more to insure
- WRONG! New cars are loaded with features that greatly reduce the likelihood of an accident occurring. Stability control, traction control, crash avoidance braking systems, lane assist, adaptive cruise control, driver attention detection and anti lock brakes to name a few. If an accident does occur these vehicles are also equipped with additional features that reduce the severity of injuries from the accident, curtain airbags, thorax airbags with head protection, knee airbags, seatbelt pretensioner…. The list goes on. Long story short, newer cars are safer and as a result insurers will often give better premiums for these vehicles.
Small cars cost less to insure
- WRONG! 40% of people think this is true (42% women, 58% men)
- Rates are based on insurance company’s loss history for that type of vehicle. Smaller cars are typically purchased by younger, inexperienced drivers, who submit more claims. Smaller vehicles also have a higher frequency of injury claims due to their lighter weight and smaller size.
Insurance will pay for the maintenance of my car
- WRONG! Insurance is for sudden and accidental events only. Maintenance and service costs can certainly be unexpected and expensive but they aren’t what the policy was designed for.
I won’t be held responsible if my friend wrecks my car
- WRONG! 25% of people think this is true (48% women & 50% men)
- The truth is, as the vehicle owner, you’re responsible. If they cause damage, the claim goes on your auto insurance policy and can affect your rates. If the claim is bad enough you could be named in a lawsuit. Moral of the story is: think carefully before tossing your keys to just anyone.
The insurance company keeps changing the rules on what’s covered and what isn’t covered.
- WRONG! The car insurance industry is highly regulated by provincial governments who set minimum coverage levels. If insurance companies want to make coverage or premium changes they have to get approval from the government.
That’s just a sample of some of the questions we’ve been asked over the years. If you have a question about your coverage let us know.
Sources
http://www.ibc.ca/ns/insurance-101/insurance-basics/insurance-myths
http://blog.cjponyparts.com/2014/07/most-and-least-ticketed-types-makes-and-colors-cars/