Patricia Lovett-Reid

When it comes to insurance, who would you bet pays the higher premiums — the soccer mom transporting the kids in her late-model minivan, or your teenage neighbour tooling around town in his red and white sports car? If you're wagging a finger at the kid, what you think you know about insurance could cost you.

A new report finds many Canadians are putting themselves, their families and their assets at risk by making misinformed decisions about their insurance based on second-hand or "intuitive" information.

The TD Insurance poll finds 63 per cent of Canadians don't go to an insurance provider, but instead ask their friends, family or colleagues for advice (25 per cent), rely on searching the Internet (33 per cent), or simply go with their gut (four per cent).

Let's unravel a few more myths about insurance.

Red cars are more expensive to insure.Wrong!
According to the poll, many Canadians think auto insurance premiums are more expensive for red (29 per cent) and two-door (54 per cent) cars. And almost half think that if you're in an auto accident your insurance rates won't go up if you don't file a claim. None of these statements are true.

The colour of your car has no impact on your premiums. Henry Blumenthal, TD Insurance vice-president and chief underwriter, says the insurance industry is "colour-blind." He says 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. He also points out that 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.

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. Not so!
The majority of Canadians wrongly believe they will be reimbursed at today's prices if they file a home insurance claim for stolen or damaged items.

When calculating the value of your contents for replacement, insurance companies look at the depreciated value. For example, if you purchased a top-of-the-line television and home entertainment system five years ago for $5,000, you might only get $1,000 for it if it were destroyed in a fire — even if it costs $6,000 to replace that same system today. You can choose to cover your contents with a higher form of protection, though. The Replacement Value option will ensure the contents of your home are insured for the amount it costs to replace them today.

You only need travel insurance if you're vacationing outside of Canada. Wrong again!
One quarter of Canadian adults think that you only need travel insurance if you travel outside of Canada, and almost half have travelled outside of their home province without it.

The report points out that 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.

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.

Taking the time to read over your insurance documents will help you understand exactly what you're covered for, and could save you a bundle of dough. And when it comes to your next car choice, it could also determine whether that soft-top, British racing green sports model is worth a test drive!

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Here are some more insurance myths:

Getting a parking ticket means your insurance rates will go up. False!
Parking tickets do not count against your driving record or your insurance.

Installing a home security system can reduce your home insurance premiums. True!

Some upgrades to your home, including taking extra security measures, can decrease your premiums.

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.

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.

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.