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Auto Insurance fallacies

There are so many misconceptions and fallacies about how Auto Insurance works, that can make things really confusing. These notions can blur the facts, making an already difficult topic even more difficult to understand. These misconceptions could result in many Canadians putting their assets and lives at risk by not purchasing the correct coverage, or by buying more coverage they already have.

Here are a few of the common deceptions and the reality behind each:

Rental cars are automatically covered by your auto insurance policy when it comes to physical damage.

False: Rental cars are in fact excluded from your basic policy but this does not mean you cannot get coverage that extends to the rental vehicle. You can actually add them into your coverage by adding a specific endorsement that extends the coverage for property damage to your vehicle to rentals. However, keep in mind that you are expected to rent a vehicle similar in style and value to your personal vehicle.

If you have a car accident and settle the costs privately, your auto insurance premiums won’t go up.

False: If you have an accident, it may seem tempting to settle things off the books… however drivers with a dodgy record who are involved in an accident could see their insurance rates double and remain there for several years. This is something you definitely want to avoid as you can get penalized through your insurance company even if you don’t make a claim. If the accident is reported to the police, or if the other party in the collision files a claim through their insurance, you can expect your rates to rise as a result.

You must immediately report an animal collision to the police, even if there’s no damage to your vehicle.

True: The Ontario Ministry of Natural Resources has reported there is a motor vehicle collision every 38 minutes and approximately one out of every five motor vehicle collisions involves a wild animal. Even if you or your vehicle were not harmed in such a collision, you must report the incident since chances are the animal was seriously hurt. Call police if there are human injuries or damage to your vehicle. Call the local wildlife agency if there’s a dead or injured animal to report.

If you drive your car into the United States, you’re covered under your existing auto insurance policy.

True: As long as the journey is for personal use, your auto insurance will apply if you take your own car on short trips outside the province or into the U.S. When it comes to your accident benefits, you are covered for these throughout Canada and the U.S.. Also bare in mind, the restriction of being able to launch a lawsuit doesn’t apply to accidents outside Ontario; (only if injuries exceed the threshold)

You can only lend your car to a driver who is over the age of 25.

False: In fact, as long as they have your consent to operate your vehicle, you can lend your vehicle to anyone with a valid license. In this case, age does not matter, however if that person makes a subsequent claim, your insurance rates may be affected. Regardless of age, be very careful to whom you lend your car, as you’re also lending your driving record. It is important to make sure they are an experienced driver with minimal or no accidents. Since they are lending your driving record, make sure you know what kind of driver they are, how long it’s been since they’ve been behind the wheel, and whether anyone else will be using the car.

A speeding ticket can have an impact on your disability insurance premium.

True: Your first minor speeding ticket (typically under 45 km/h over the limit) may not affect your auto insurance premiums but this depends on your insurance company. REMEMBER: How you drive can impact other elements of your insurance coverage. Speeding tickets are considered risky behaviour, so when obtaining a disability quote, for instance, you may be asked if you have received a speeding ticket in the last year. If you have received a speeding ticket in the past, you are considered a higher risk for a disability claim.

Submitting a claim to replace your windshield will impact your car insurance premium.

False: As they’re part of your comprehensive coverage and you’re not deemed at fault for these types of claims, glass claims won’t affect your premium. That being said, it is very unlikely you will see your rates increase because of a glass repair or replacement. If the damage is repairable, your insurer will pay the cost of the windshield repair without a deductible. If the windshield has to be replaced, your deductible will most likely apply.

If you leave your car running or the keys in the car and it gets stolen, you’re not covered through your auto insurance policy..

False: As this is false, we do not recommend leaving your car running un-attended. However, if you carry comprehensive insurance on your vehicle, theft is covered, even if you actually make it easy for the car to be stolen. KEEP IN MIND – This can and might be noted as fraudulent and further investigation may be applicable. Read more on Insurance Fraud here. If valuables are stolen from your car are, it is unlikely that they will be replaced. You will have to look to a home insurance policy for that kind of coverage. Again, expect your insurer to scrutinize your claim to establish that there is no fraud involved. Leaving a car running and having it stolen is a common insurance scam and insurance companies are generally suspicious of these types of claims.

Parking lot accidents are 50% at fault.

False: No matter how little or how severe, Parking lot accidents are investigated just as thoroughly as those that occur on the road. If both vehicles are moving when the accident occurs, it may in fact be determined to be shared equally in this situation, such as both cars backing out at the same time, but these situations are less common than others. List below are the more common parking lot accidents and will almost always be deemed 100 per cent the fault of the driver:


  • Backing into a parked car
  • Striking a car with your door when opening it
  • Clipping it when passing by