Experts Debunk Common Car Insurance Myths

Misunderstandings about auto insurance are common, and experts warn that confusing myth with reality can cost drivers significant money. Many people assume certain coverages apply or believe widespread rumors without checking the actual policy wording. Understanding how insurers evaluate risk and what each coverage actually protects can help drivers make better decisions and avoid unexpected expenses.

Steven Harris, a licensed insurance broker and expert with LowestRates.ca, says one reason myths endure is the legal language used in insurance contracts. “Policies are often written in legal or technical terms that don’t always translate into everyday language,” he explains. That gap creates room for assumptions and secondhand advice—often based on friends’ experiences—to take hold.

The following are some of the most persistent misconceptions about car insurance, explained clearly so you can tell fact from fiction.

Red vehicles cost more to insure

Many drivers believe a red car will push insurance premiums higher because it’s more noticeable, encourages risky driving, or attracts more police attention. However, there is no meaningful data linking vehicle colour to a higher risk of collision or theft. Insurers instead base rates on objective factors such as the vehicle’s make and model, its model year, theft and claim statistics for that vehicle, and the driver’s history. Bright paint does not, by itself, raise insurance costs.

Comprehensive coverage means full coverage

“Comprehensive” often gets mistaken for “complete” protection, but the two are different. Comprehensive coverage protects against non-collision events—think theft, vandalism, fire, hail, and certain kinds of water damage. It does not cover damage from a collision with another vehicle or object; that is handled by collision coverage. When someone says they have “full coverage,” they generally mean they carry both collision and comprehensive coverages along with liability. If your policy only lists comprehensive, you may still be missing important protections for accidents and should review your options.

Your personal policy covers ride-share driving

Driving for rideshare services like Uber or Lyft introduces complications to insurance coverage. These platforms usually provide a commercial or “master” policy that applies while the app is active and you are carrying passengers, but there are different coverage phases to be aware of. Anne Marie Thomas, director of consumer and industry relations at the Insurance Bureau of Canada, explains: if you’re simply driving to the grocery store, your personal auto insurance is typically in force. If you accept a ride or have the app active and are awaiting a fare, the rideshare provider’s policy may apply instead. It’s essential to inform your personal insurer if you use your car for rideshare or other business activities so you understand which protections apply and when.

Moving homes doesn’t affect auto insurance rates

Where you live matters to insurers. Morgan Roberts, vice-president at RH Insurance, notes that even moving next door can change your postal code and alter your insurance territory. Insurers price risk by geographic zones—taking into account factors such as local claim frequency, theft rates, traffic patterns, and regional weather—so your premiums can go up or down depending on the new location.

Auto insurance will automatically rise when you make a claim

Whether a claim pushes your premium higher depends on the claim type and fault determination. If you are found at fault in an accident, your premium is much more likely to increase. If another driver is at fault and that is clearly established, your rates often remain unchanged. Similarly, many comprehensive claims—such as theft, vandalism, or hail—do not always lead to higher premiums. Still, frequent claims can influence underwriting and pricing over time, so it’s wise to weigh the long-term consequences before filing small claims.

Parking tickets increase insurance premiums

Parking tickets and automated speed-camera tickets generally do not affect your insurance premiums. They are enforcement penalties, but they don’t reflect the type of risky driving behaviour insurers track when setting rates. However, tickets issued after a police stop—such as those for dangerous driving or certain moving violations—can appear on your driving record and influence premiums. In short: pay parking fines to avoid fines and towing, but know they usually won’t raise your insurance costs.

Read more about auto insurance:

• Your complete guide to car insurance in Canada
• Buying a car in Canada: 7 tips for newcomers
• What is a deductible in auto insurance?
• Best credit cards for rental car insurance in Canada