Common Myths for the Insurance Industry

insurance myths

Every industry has myths, including insurance. Auto, home and business insurance consumers may have misconceptions about the policies and coverage options. TIM is here to shed light on these interpretations and debunk common insurance industry myths.

Auto Insurance

MYTH: The colour of your vehicle affects your insurance premium.

FICTION: The colour of your vehicle does not affect your insurance premium. For example, a red or blue car does not cost more to insure. It does not matter what colour your vehicle is, your insurance premium is not impacted by this factor.

MYTH: Individuals under 25 pay more for car insurance.

FACT: Being a new or young driver affects your car insurance premium. This is because an individual that is younger and has fewer years of driver’s experience. Depending on the province you live in, some insurance companies only factor in years licensed, whereas others factor in age and years licensed.

Other considerations that could impact your insurance premium:

  • Driving history
  • The type of vehicle you drive (make, model, year)
  • What you use your vehicle for
  • How many people regularly drive the vehicle
  • Where you live
  • The type of coverage you choose
  • Industry/economic factors such as markets, inflation, taxes, and regulations

MYTH: The place you live affects your insurance premiums.

FACT: Insurance premiums will differ between individuals depending on whether they live in an urban, suburban, or rural area, and based on the risks associated with those areas. For example, if you live in a city that has a higher accident rate, you will pay higher rates due to the heightened risk factors.

Insurance Industry

MYTH: Natural disasters, cause insurance premiums to go up everywhere.

FACT: Major natural catastrophes have a direct impact only in the areas they occur. Elsewhere, may have an indirect effect. This is how it works:

 

  • Insurers also buy insurance – called reinsurance – to help cover unusually large losses.
  • Reinsurance companies operate around the world and pay when there is a major disaster. If reinsurers predict a year with high losses based on certain factors, they may raise their rates.
  • When these rates rise, Canadian insurance companies may have to pay more for their reinsurance and that cause could affect your premiums.

Claims & Premiums

MYTH: You always get less than you ask for, so inflate your claim.

FACT: Inflating an insurance claim is in fact, a crime. Insurers will pay you for your losses according to your policy terms, coverage, deductibles, and other factors. Your adjuster may review your receipts and details to ensure you receive proper value and service. Insurance crime increases insurers’ claims costs and, overall, costs everyone in the form of increased premiums.

Connect with TIM!

TIM is a highly focused insurance brokerage offering tailor-made policies and customized coverage to fit your needs. We aim to ensure that the wide range of our client’s assets are protected from most forms of risk with bespoke personal, commercial, and financial insurance services and packages. Contact us today!

To learn more about common insurance industry myths, read this IBC article.