8 car insurance myths that are way off track: What will *actually* cost you more money?

Drivers across Canada are legally required to carry auto insurance but that doesn't mean getting or understanding auto insurance is easy. Unfortunately, there are many myths and misconceptions surrounding car insurance. What's worse is that buying into popular misconceptions can be costly, especially for first-time drivers new to the auto insurance shopping experience.

To help, here are eight common car insurance myths that are completely debunked. Consider this a first step in building the confidence required to buy a car and get insurance that fits your goals and budget.

Myth #1: Red cars more expensive to insure

One of the most persistent myths about car insurance is that red vehicles cost more to insure. It's just not true.

In fact, none of the information you give your insurer — such as your car’s make, model, year and vehicle identification number (VIN) — tells them the colour of your car.

However, your car's make, model and year definitely impact your insurance rates, as does the price paid for the vehicle (or the Blue Book value), along with the vehicle's overall safety record. Believe it or not, the cost to repair the car after an accident also impacts your rate, so it pays to learn a thing or two about a vehicle before you commit to driving it home.

Another factor that heavily influences your car insurance rate is your personal driving record, along with how you use your car and where you park it on a regular basis.

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Myth #2: My credit score isn't important when calculating my insurance rate

Most insurers can use credit-based insurance score to calculate your premiums but whether they actually do — and how — depends heavily on your province. In Ontario and Newfoundland and Labrador, auto insurers are still banned from using your credit score to set car insurance premiums. Ontario has studied lifting the ban, but no change has been implemented yet (1). In other provinces, insurers generally need your consent before they pull your credit file, and many use it more often for home insurance than for basic auto coverage (2).

From a money-management standpoint, it means:

• A strong credit history can help you qualify for better borrowing rates and may help keep insurance costs down if you live in a province where credit scores are permitted.
• If you’re in Ontario or Newfoundland and Labrador, improving your credit score is still crucial for mortgages, loans and credit cards, even if it doesn’t directly change your auto premium.

Myth #3: Insurance is cheaper on newer cars

Is it less expensive to insure new vehicles? It's actually the opposite, since these cars cost more to repair and have higher replacement values than used cars. Because it will cost the auto insurance provider more money to buy a part for a new car or replace a damaged or stolen vehicle that is newer, the insurance tends to be cost more for newer vehicles.

How much will my insurance go up with a new car?

Recent Canadian quotes show that insuring a brand-new vehicle can cost 10% to 30% more than insuring an older version of the same model. For example, a 2023 Honda Civic in Ontario cost about 30% more to insure than a 2015 Civic for the same driver profile; similar gaps of 12% to 26% showed up for popular models like the Toyota Corolla and Ford Escape (3).

Why the higher cost matters for your budget?

Newer vehicles have more expensive parts and complex sensors, so collision repairs (and claims) cost more, which pushes premiums up (4). At the same time, auto insurance across Canada has been rising — premiums increased nearly 6% from late 2022 to late 2023, and another 7.3% year-over-year by October 2025 (5).

If you’re choosing between a new and lightly used car, you’ll want to factor not just the sticker price but also:

• The ongoing insurance cost (get a quote on each model before you buy)
• Fuel efficiency, expected maintenance and financing costs

Those differences can easily add hundreds of dollars a year to your total cost of ownership.

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Myth #4: Older drivers cost more to insure

For most Canadians, car insurance gets cheaper through your 30s, 40s and 50s, assuming you keep a clean record. Data from Canadian brokers show teen drivers can pay up to five times more than drivers over 25, because young drivers are over-represented in serious collisions (6).

By your 50s and early 60s, many insurers see you as experienced and lower-risk. Ratehub’s 2025 analysis found a hypothetical 60-year-old driver paying about $170 per month, versus higher averages for younger groups (7).

However, premiums can start to rise again after 70, as insurers factor in slower reaction times and higher injury severity. Many companies still offer mature-driver and retiree discounts, especially if you:

• Drive fewer kilometres
• Maintain a claims-free record
• Take a defensive-driving or mature-driver course

From a retirement-planning angle, it’s worth asking for senior discounts and usage-based programs — they can free up cash flow as other costs, like health care or housing, rise.

Myth #5: Couples are more expensive to insure

Premiums can be lower for those in committed relationships that are living under the same roof. Insurers tend to think that this cohort is less risky than a single person. Why? Because those in long-term relationships and part of family households typically participate in less risky behaviour, like speeding or driving drunk.

What isn't as obvious is that most committed couples and family households tend to skew to older age cohorts — and this is supported by Statistics Canada data. According to this data, Canadians are marrying later in life with the average age at marriage now around 35 years, up from the mid-20s in the late 1960s (8).

In theory, the more committed you are to other people — like caring for children — the less risk you take in all areas of your life, and this translates into lower car insurance premiums. Another reason why couples often find cheaper car insurance is because of their age. Statistically speaking, as we age we tend to reduce risky behaviour. Since the average age to get married in Canada is between the ages of 30 and 31, this means that couples are typically older and less prone to risky behaviour — the biggest factor in higher car insurance premiums.

It's also why teen boys are slapped with some of the highest car insurance premiums. Statistically speaking, this age and gender cohort is most likely to pursue risky behaviour behind the wheel of a car.

The financial takeaway:

• If you move in with a partner, ask your insurer whether combining policies or listing both drivers on the same policy can lower your total household premium.
• Don’t assume being single automatically costs more; your individual driving record, vehicle and postal code still matter more than your relationship status.

Myth #6: Accidents and tickets affect my car insurance rate forever

Tickets and accidents won’t haunt your insurance record forever, but how long they do stick around and make an impact depends on where you live and what happened:

• Minor tickets (like small speeding fines) typically affect your premium for about three years in many provinces (9)
• At-fault accidents can influence your rate for three to six years, with six years common in provinces such as Ontario, Alberta and B.C (10)
• In B.C., driver-penalty points remain on your record for five years, even though you only pay the penalty premium once (11)
• Serious convictions (for example, impaired driving) can stay on your record for up to 10 years and dramatically increase your premiums (12)

From a money perspective, a clean record is one of the biggest levers you control for lowering long-term insurance costs. A single at-fault crash or major ticket can add hundreds of dollars a year for several renewal cycles, which compounds just like investment returns — only in the wrong direction.

If your budget is tight, it’s worth:

• Adding accident forgiveness if your insurer offers it
• Avoiding unnecessary small claims that could cost more in long-term premiums than you get back

Myth #7: Two-door cars more expensive to insure

Two-door cars do not factor into how a premium is decided by insurance providers. What does factor into calculating insurance premiums is a vehicle's:

• claims history
• likelihood of the vehicle being stolen
• the vehicle's accident frequency
• as well as repair and replacement costs

Myth #8: All car insurance companies have similar rates

While most carriers may offer very similar types of coverage, the premiums they charge vary from company to company. In fact, the gap between insurer premiums has actually widened as rates have climbed. StatsCan’s 2025 analysis of the auto-insurance sector shows claims costs rising sharply again, with the claims ratio for auto insurance peaking at 90.4% in the third quarter of 2024, as collisions, thefts, repair costs and vehicle prices all pushed payouts higher (13).

And where you live also makes a difference. According to data, the price index for passenger-vehicle insurance was 7.3% higher in October 2025 than a year earlier, with Alberta’s premiums up 17.8% and Ontario’s up 7.8% (14).

This makes comparison shopping for the right car insurance policy a critical tool in the fight to keep your budget in check. In general, experts recommend comparing at least three quotes before you renew. Online brokerages like YouSet now advertise that customers save around 29% on average compared with traditional providers, with bundling home and auto policies unlocking up to an extra 15% in discounts (15).

For your household budget, that’s real money: if your annual premium is $2,000, shaving 29% off saves about $580 a year — cash you can redirect to debt repayment, an emergency fund or your TFSA.

Bottom line

Insurance can be difficult to understand, especially for people seeking out a policy for the first time. However, it is important to know that insurance is not a one-size-fits-all solution. Customization is crucial to get the perfect coverage that suits your individual needs and will protect you when life throws unexpected hurdles. Lastly, make sure to weigh your available options to make sure you’re not overpaying on car insurance.

— with files from Sigrid Forberg and Romana King

Article sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

Rates.ca (1); ThinkInsure (2); Mitch Insurance (3); My Choice (4); Rates.ca (5); Brokerlink (6); Ratehub (7); Statistics Canada (8); Bauld Insurance (9, 12); Wagners (10); ICBC (11); Statistics Canada (13); Ratehub (14); YouSet (15