Fact or myth? Here’s what you need to know about car insurance policies

Although auto insurance remains such a large part of the household budget, there are still some myths drivers may believe that just aren’t true.

With about 26 million vehicles on the road in Canada, it’s mandatory to have car insurance.

It’s a major household expense for many drivers and rates have been rising steadily as insurers face higher costs.

Despite rates rising, not all policies are the same and there can be differences in what’s covered and what isn’t. In fact, some drivers may be confused about the insurance they’re currently paying for.

Myth: Comprehensive coverage is the same as full coverage

According to insurance expert Steven Harris with LowestRates.Ca, the myth of comprehensive coverage being the same as full coverage is false.

“It will provide coverage for perils like fire, theft, and vandalism if someone breaks into your car and tries to cause damage, that type of thing,” said Harris.

Harris told CTV News collision insurance covers you for accidents with vehicles, collisions with objects, or hit and run crashes. Having both collision and comprehensive coverage is generally considered full coverage.

Myth: Personal policy covers rideshare use

Another car insurance myth is that a personal policy also covers you if you’re using your vehicle for rideshare services. Harris explained that this is also false.

Most personal policies exclude commercial use such as ridesharing and food delivery. Additional coverage is needed to protect yourself if you chose to use your car for those reasons.

“You don’t want to shortcut that,” said Harris. “You want to be transparent so at the time of claim there are no surprises, because it could be a very costly mistake.”

Fact: Insurance will climb from 2 at-fault claims

If you have two at-fault claims, your insurance can go up substantially. According to Harris, this is not a myth, but true.

“If you have two at-fault accidents generally within a period of about six years, you would move into what’s called a nonstandard insurance market for auto insurance, and yes, your insurance premiums do go up quite a bit.”

Myth: You’re not on the hook if someone else crashes your car

Another myth when it comes to auto insurance is that if when lending a vehicle to a friend and they crash, their insurance pays. That’s not true.

“If you lend your car, you lend your insurance,” Harris explained. “So, if that person is driving your vehicle and is in an at-fault accident, it will generally follow the registered owner of the vehicle.”

“Do be mindful of who you lend your vehicle to and make sure they have a valid driver’s licence.”

Myth: Older cars only need liability coverage

Many drivers with older cars chose to go without collision and comprehensive insurance to save money, assuming older cars only need liability coverage. However, in this current market, Harris says this is also a myth.

“Definitely don’t assume, ‘I have a 10 or 12-year-old vehicle it’s not worth anything,’ because it really has changed in the past few years,” Harris said.

A 10-year-old car these days could still be worth $15,000 dollars, so Harris suggests speaking with your insurance company to see if keeping full coverage on an older vehicle might make sense.