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How to myth-bust your way to lower car insurance rates

There are a lot of myths when it comes to car insurance, so separating fact from fiction can help bring down premiums.

For example, a new survey shows 1 in 5 Canadians said they believe the colour of their car impacts their insurance rate, which is not true.

“This particular myth is based on the stereotype of a fancy car – a Lamborghini or Ferrari is often red,” Matt Hands, senior business unit manager of insurance at Ratehub.ca, told Yahoo Finance Canada.

“Insurance rates are often higher for a sports car because it’s more expensive and perceived to be a higher risk (i.e. propensity of speeding & reckless driving), but not because of its colour.”

Almost half (46 per cent) said they believe gender doesn’t affect rates, which is false because insurers have used historical data to determine male drivers are riskier.

More than 40 per cent think it doesn’t matter how often they drive, which is also false.

“According to insurers, the more time drivers spend on the road, the more likely they are to get into accidents,” said Hands.

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Postal codes have an impact on premiums but 39 per cent don’t believe it. Densely populated areas typically mean higher rates because accidents and vandalism become more likely. For a number of reasons, B.C. drivers currently pay Canada’s highest premiums.

Contrary to what 36 per cent of respondents believe, parking tickets have no impact on insurance rates.

How to pay less for car insurance

A lot of factors that influence insurance premiums are out of our control. Insurance companies consider many different things when calculating rates.

“This includes things like your vehicle’s make, model and year, driving history and where you live,” said Hands.

“With this information, they can determine the likelihood of a claim and the potential costs associated with that claim.”

There are some things you can do to get the best rate possible. Hands suggest shopping around and asking about discounts, as well as bundling with other insurance like home insurance. Hands also suggest increasing your deductible.

“This is the amount you have to pay out of pocket when you make a claim,” said Hands.

“Typically, the higher the deductible, the lower the car insurance premium.”

The value of a vehicle is a deciding factor but a vehicle’s make and model can also sway rates.

“If you were thinking of buying either a 2019 Toyota Camry or 2019 BMW 3 series, it would be cheaper to insure the Camry because typically the cost to replace or repair a Toyota is cheaper than the BMW (i.e. the parts for a BMW 3 series are more expensive than the parts for a Toyota Camry),” said Hands.

“Furthermore the more technology within a car the more it will cost to repair or replace and therefore an insurer will increase the rates they offer accordingly.”

Hands says safety ratings and crash statistics can also have an impact.

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