With Debunking Day right around the corner on March 11th, it’s a perfect opportunity to clear up some long-standing misunderstandings about home and auto insurance. Many people make decisions based on assumptions or outdated advice, and unfortunately, those misconceptions can lead to costly surprises when it’s time to file a claim.
To help you stay protected, here’s a fresh look at eight widespread insurance myths—and what’s actually true.
Myth #1: “Red cars cost more to insure.”
The truth: The color of your vehicle has zero impact on your insurance rates. Insurers base your premium on things like the age and make of your car, its safety features, how you use it, where you drive, and your driving history. Paint color simply isn’t part of the equation.
Myth #2: “Only people in flood zones need flood insurance.”
The truth: Flooding can happen almost anywhere. Roughly one-quarter of flood-related claims actually come from outside designated high-risk areas. Even more important, most standard homeowners policies don’t cover flood damage. If your home is in an area that gets rain—which is virtually everywhere—it’s worth evaluating whether flood insurance makes sense for you.
Myth #3: “Full coverage isn’t necessary for an older car.”
The truth: While older cars generally lose value over time, that doesn’t automatically mean you should drop certain types of coverage. Most states still require liability insurance regardless of your car’s age. And if replacing or repairing your vehicle after an accident would be a financial burden, maintaining collision and comprehensive coverage may still be the smartest move.
Myth #4: “My homeowners policy covers all of my belongings.”
The truth: Homeowners insurance does include protection for personal property, but this coverage only goes up to a certain limit based on your policy. Valuable items—such as fine jewelry, collectibles, or high-end electronics—may be worth more than your standard limits allow. To fully protect those items, you may need separate scheduled coverage or special endorsements.
Myth #5: “Anyone who drives my car is automatically insured.”
The truth: Your policy may extend coverage to someone who occasionally borrows your vehicle with your permission, but there are important exceptions. Business-related driving, delivery work, or rideshare activity often falls outside personal auto coverage. And if someone uses your car regularly, you may need to list them on your policy to ensure they’re fully protected.
Myth #6: “I don’t need homeowners insurance because I have savings.”
The truth: Even a sizable emergency fund may not be enough to shoulder the cost of a major disaster. Homeowners insurance covers more than the structure of your house—it also includes liability protection, coverage for personal belongings, and assistance if you’re unable to live in your home temporarily. With average reconstruction costs now surpassing $320,000, skipping insurance could put your financial stability at risk.
Myth #7: “My car insurance includes coverage for rental cars.”
The truth: Many auto policies do provide rental car coverage, but usually only for personal travel. Rentals used for business trips or commercial reasons often fall outside the scope of personal auto insurance. Before turning down coverage at the rental counter, confirm whether your existing policy extends to your situation.
Myth #8: “My credit score doesn’t affect my insurance premiums.”
The truth: In many states, insurers use credit-based scores to help calculate rates because credit behavior can be linked statistically to risk. If your credit has seen improvements recently, it may be worth checking in with your agent—you might qualify for better pricing.
Smart Ways to Prevent Coverage Gaps
Staying informed and proactive can make a huge difference when it comes to protecting your finances. A few simple habits can help ensure you’re never caught with less coverage than you need:
- Look over your policy once a year, especially after major life or property changes.
- Discuss exclusions with your agent so you understand what isn’t covered.
- Keep a record of your belongings or maintain updated photos of your car’s condition and value.
- Learn the difference between replacement cost and actual cash value—they affect how much you receive after a loss.
One helpful question to ask yourself: “Would I be financially prepared if I had to file a claim tomorrow?”
Key Moments to Reevaluate Your Insurance
Your life can change quickly, and your insurance should adjust along with it. Consider reviewing your policy whenever any of the following occur:
- You buy or sell a home or vehicle
- You complete a renovation or major improvement
- You experience a major life event, such as marriage, divorce, or welcoming a child
- A teen or new driver joins your household
- You launch a business or begin a side job
- Your financial situation, income, or credit score changes
Whether you’ve subscribed to one of these myths for years or simply want to confirm you’re fully protected, now is a great time to take a fresh look at your coverage. We’re here to help you review your options, eliminate guesswork, and keep unexpected gaps from catching you off guard.
Reach out anytime to schedule a simple, no-pressure policy review. We’re happy to walk through your coverage and make sure it still fits your needs.
