I was recently speaking with my neighbour about what ISB Canada does for the insurance industry. I was explaining to him that ISB helps claims adjusters by supplying documents such as police reports, insurance histories, drivers abstracts, etc. to support their claims and catch fraud. He asked me why he pays more insurance than his friend does that has the same car. He continued and asked if it was because his car was red and his friend’s was black. Then he went on to explain that he has not made a claim in 8 years and hasn’t had a ticket. It really made me think about how many people misunderstand the insurance industry and how it actually works. They don’t realize that most of their premiums go to fraudulent claims and not to the insurance company’s pocket. Yes insurance companies are out to make money…after all; they are a business, just like the corner store. But this blog is not about how much they make or don’t make, it’s about how they get your yearly premium.
Let’s start off on my neighbour’s question:
- Red cars are more expensive to insure than other colours?
No they are not. It depends on the year, make, model and the driver (age, prior accidents, and tickets, etc.) and where you live. Different city…different rates.
- Will my rates go up if I make a claim? Or get into an accident?
Your insurance rates can actually increase at any time, not just because you were in an accident. This really depends on the insurer, but most insurers have accident forgiveness (for your first accident)
- Will my insurance cover my car if my friend gets into an accident with it?
Insurance covers the car…not the driver.
- Will my rates go up because of a speeding ticket?
Most companies won’t increase your rates, but if you accumulate two or three speeding tickets in a few years or get a major speeding ticket, you might get a rate increase.
- Are two door cars more expensive to insure?
Repair costs, frequency of theft and previous claims determine your cost, not whether it’s two-door or four-door.
- Is insurance cheaper if I go to the company direct and not through a broker?
Brokers actually have better rates because of buying power with the insurers. They have multiple insurers they deal with to compete for your business. Let them do the work…the insurer is paying them, not you.
The questions could keep going, but at the end of the day…if you would like your rates to come down, then fraud claims must come down. But being a good driver definitely helps as well!