Insurance is a pretty complex industry, with enough rules and regulations to make your head spin. That’s why to sell insurance you need a professional designation and education – there is too much going on to be able sell insurance without it. So it’s understandable that there is a lot of confusion regarding things that are, or are not, true in the field of insurance.

Without doubt, the best way to guarantee you don’t get in over your head is to get a policy with a knowledgeable insurance broker.

1: The colour of my car affects my insurance premium. Fiction. Red cars just look like they should cost more right? Flashy, easy to see, probably involved in more thefts & claims. Red cars pay the same insurance as everyone else. The colour of your car does not affect your premium. The way insurance companies rate your policy is by examining the make, model, and year of your vehicle, the territory you drive it in, and what your driving record is like. The colour of the vehicle is never factored in, and would be very hard to keep track of. That being said, custom paint jobs or special graphics added to your vehicle will increase the cost of your insurance, because it costs more to replace these specialist customizations. But the fact remains that the colour of your car, be it red, black, silver or even hot pink, will not affect your price.

2: Young men and women pay ridiculous insurance prices. There is no doubt about it, young drivers, particularly young men, pay very high premiums. Whether or not it’s ridiculous is up to the consumer, but it costs a lot to be a young driver. Insurance companies don’t really have a choice in the matter, because young people get into many more accidents, and the accidents they get into tend to be more expensive.

3: My friend can’t drive my car if he isn’t a listed driver on my policy. Fiction. So long as your friend is legally licensed, and operating a vehicle within the law, he absolutely can drive your vehicle, and is covered under your insurance policy. So if your friend needs your car to take that road trip, you can rest easy knowing he will be protected by your coverage.

4: Accidents and Tickets are removed on their anniversary. Fiction. It’s a great feeling to have a conviction come off your record. FINALLY, that blemish on your life is gone, and your insurance premiums are going to fall. All is well with the world. Unfortunately, that doesn’t actually happen. The problem is that the conviction coming off your record, and insurance companies recognizing this change, are two separate things. Changes to your driver record are only recognized by insurance companies upon renewal, so you will have to wait for a while to see your rates change.

5: New purchases are covered by your old car’s insurance company automatically. Fact. Well mostly. It’s true that most insurance policies do extend coverage from your current vehicle to a new vehicle automatically, for a period of about two weeks. However, the coverage that extends is only up to limits for the vehicle listed on the policy, not the new vehicle purchased. That means if you trade in a 1995 Impala and buy a 2013 Lamborghini, your limits will not be sufficient. Legal liability coverage transfers a little bit better, but it’s still important to contact your broker or insurance provider to advise them of the change immediately. A main benefit of this “grace period” is it makes a new purchase legal to drive off the dealership lot right away, because you automatically get the liability coverage from your old policy, which is required by law to drive.