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Canadians risk being underinsured: survey

Most drivers incorrectly believe comprehensive coverage means their car insurance policy covers them for everything

September 1, 2020  by CM Staff

RATESDOTCA auto insurance myths – False statements (PHOTO: RATESDOTCA)

TORONTO — RATESDOTCA finds the majority of Canadian drivers scored an ‘F’ on a recent nationwide auto insurance literacy survey, meaning that they may be at risk of overpaying for premiums or worse, be underinsured. The survey asked seven common questions that drivers consider when securing vehicle insurance and found on average almost three (2.6) out of seven questions were answered correctly, with 9% of Canadians incorrectly answering every statement.

Here are some results:

  • 42% incorrectly believe that comprehensive vehicle insurance covers everything (34% knew this is false; 24% did not)
  • 25% did not think they can temporarily suspend their car insurance if they are not driving during the COVID-19 pandemic (39% of Canadians correctly knew they can; 36% say they did not know)
  • Nearly seven in 10 drivers (68%) incorrectly believe that insurance companies base premiums on the number of demerit points a driver has (just 10% answered right; 22% did not know)
  • 38% think the colour of a vehicle influences the cost of insurance (it does not)
  • Most respondents (79%) think an expensive or high-end car costs more to insure than an economically priced vehicle (8% do not and 13% did not know).

More comforting to learn was that 78% of Canadians knew that they can receive a discount on their insurance bill if they bundle their auto and home/condo insurance and more than half (57%) are aware they can switch auto insurance provider before their policy is due for renewal.*

“As Canadian drivers, the more we understand about auto insurance, the more likely we will get the coverage we need at a fair price and avoid disappointment when filing a claim for damages,” said Liam Lahey, insurance editor, RATESDOTCA, in a prepared statement. “For example, although the name may be confusing, comprehensive insurance is an optional coverage you can add to your policy. It covers damages resulting from certain risks or perils such as theft, vandalism, and falling or flying objects but does not cover damages resulting from a collision.”

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RATESDOTCA auto insurance myths – True statements (PHOTO: RATESDOTCA)

The survey’s findings also reveal: In some cases, the older, the wiser

  • 46% versus 34% of Canadians under the age of 55 are more likely to know the colour of a vehicle has no bearing on the cost of an insurance premium
  • Canadians aged 55 or older (63%) are more likely to know they can switch providers before their policies are up for renewal compared to those under the age of 55 (53 %)
  • 83% of drivers 55 and older are significantly more likely to be aware they can get a discount for bundling home and auto policies than people under the age of 55 (74%)
  • Men (61% versus 52% of women), Quebeckers (58% versus 55% rest of Canada) and a policy’s primary driver (64% versus 44% of occasional or secondary drivers) were more likely to separate insurance facts from myths on three or more of the quiz’s statements