Talk to your clients about auto insurance myths so they don’t see red

Red cars are more expensive to insure, right?

Wrong. Yet, according to a 2019 Ratehub survey, roughly 22% of respondents thought car colour had an impact on insurance rates.

Several insurer and brokerage websites have blog posts titled What New Drivers Should Know About Purchasing a New Car and Auto Insurance (Allstate Canada) or Is It True That Auto Insurance Is More Expensive for a Red Car? (Farmers Insurance).

Still, for brokers, there’s still nothing like a good old-fashioned discussion to educate their clients.

“If people have the perception — and there’s a cursory knowledge that people have — it really underscores the importance of talking to an insurance professional,” said Elliott Silverstein, director of government relations with CAA Insurance.

Scott Logan, director of personal lines with Mitchell & Whale Insurance Brokers, has had prospective car buyers ask which colour is the cheapest to insure.

“I reassure them colour has no bearing whatsoever on insurance rates. It’s not part of the questions we ask,” he said. “We talk to our clients when the question comes up and then educate them on it.”

And even though the car colour question doesn’t surface often, when it does, Logan said the queries tend to come from “inexperienced drivers who just don’t know how insurance works.”

Aside from the colour myth, “there are factors in and around the driving space that don’t necessarily have a direct impact on your insurance [rates],” Silverstein said.

For example, receiving a ticket because of photo radar won’t raise auto premiums. “We get questions about that quite often,” said Logan, “because one of the questions we ask is, ‘Have you had any convictions in the last three years?’”

Another misplaced concern is parking tickets. “People get a parking ticket, and for some there’s fear and anxiety their insurance rates will go up because they haven’t paid the ticket,” Silverstein said.

Logan said when he asks the convictions question, clients sometimes admit to having unpaid parking tickets. But Logan “quickly puts them at ease and says [the tickets] don’t count.”

Many clients also think that a convertible is more expensive to insure than a hardtop of the same model, but Logan uses hard stats to prove otherwise.

Though convertibles cost anywhere from $5,000 to $10,000 more than the hardtop model, “the insurance rates are actually 10% to 20% less for a convertible,” Logan said.

Take the 2018 Ford Mustang base model vs. the 2018 Ford Mustang convertible: the convertible was as much as $600 less to insure. “That number will vary depending on the company, and where you live and other factors, but [the difference is] about 20%,” he said.

“That’s surprising, because if you google Is insurance more for a convertible? you see a lot of answers that say yes, it is.”

Logan, however, always tries to “answer the questions and to educate when possible.”

Feature image by iStock.com/THEPALMER