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8 Insurance Myths Revealed

Our friends at Canadian Insurance Top Broker magazine published this great article on Insurance Myths. Read more below

Source:  Canadian Insurance Top Broker Magazine 

Date:  August 9th, 2011

Many Canadians are putting themselves, their families and their assets at risk by making misinformed decisions about their insurance based on hearsay and insurance urban legends, according to a new report by TD Insurance.

When it comes to making significant decisions regarding insurance products and services, 63% of Canadians don’t go to an insurance provider, but instead ask their friends, family or colleagues for advice (25%), search the Internet (33%), or simply go with their gut (4%).

“Doing your own research online and asking friends for advice about insurance is certainly a good starting point, but if you rely solely on these sources, then you may encounter some issues down the track,” says Henry Blumenthal, vice president and chief underwriter, TD Insurance.

Ensure your clients know the truth about the following urban legends, revealed in the survey.

Myth: Red cars are more expensive to insure

Many Canadians think auto insurance premiums are more expensive for red (29%) and two-door (54%) cars. And almost half (48%) think that if you’re in an auto accident your insurance rates won’t go up if you don’t file a claim.

“It doesn’t matter if your car is blue, red, striped or chequered, your insurance rate for that make, model, and age of the vehicle will be the same,” says Blumenthal. “There are so many factors that make up the formula for auto insurance premiums. For example, a mom who lives in the city centre and drives to work each day may actually be more expensive to insure than a 28-year-old man who lives in a suburb and catches the bus to work.”

Myth: If you file a claim through home insurance for stolen or damaged items due to fire or water damage, you will be reimbursed for replacing the items in your home at today’s prices

63% of Canadians wrongly believe they will be reimbursed at today’s prices if they file a home insurance claim for stolen or damaged items.

“A standard home policy only covers you for the value of your contents, less depreciation. For example, if you purchased a television five years ago for $500, you might only get $100 for it if it were destroyed in a fire even if it costs $600 to replace that same TV today,” says Blumenthal. “If you want a higher form of protection you should choose to add the Replacement Value option to your contents coverage, which will ensure the contents of your home are insured for the amount it costs to replace them today.”

Myth: You only need travel insurance if you’re vacationing outside of Canada

28% think that you only need travel insurance if you travel outside of Canada, and 48% have travelled outside of their home province without it.

“Getting sick or injured while on vacation isn’t only bad timing, it’s very expensive. Provincial medical coverage won’t provide comprehensive coverage if you’re outside of your home province, so it’s important that you ensure you’re covered even when you’re travelling domestically,” says Minor. “And when it comes to international travel, many Canadians don’t realize that the average out-of-country in-hospital bill can cost up to $10,000 per day, and the average emergency room visit is $1,000.”

Your clients can test their knowledge of insurance coverage with the below TD Insurance quiz.

True or False?

1) Getting a parking ticket means your insurance rates will go up.

False: If that were the case, we’d all be singing the blues. Parking tickets do not count against your driving record or your insurance.

2) Installing a home security system can reduce your home insurance premiums

True: Believe it or not some upgrades to your home, like taking extra security measures, can actually decrease your premiums.

3) Life insurance is only useful for people who have children.

False: Life insurance should be an integral part of everyone’s financial planning, and at minimum should cover funeral costs. One of the advantages of thinking about it sooner is that it can be more affordable since premiums are based on life expectancy, which naturally decreases over time.

4) If you’re in a car accident but don’t file a claim, your insurance premiums won’t go up.

False:  If your insurance company finds out you were in an accident, they can raise your rates whether you made a claim or not. You may not have told your insurance provider about the accident, but the other person in the collision may be filing a claim.

5) You may be liable if a contractor is injured while working on your property.

True: It is your responsibility to ensure that workers on your property are covered. If they aren’t, you may be held liable and have to deal with a very costly settlement.

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