8 Common Insurance Myths That Could Leave You Exposed

March 11th is Debunking Day, making it the perfect moment to clear up some long‑standing confusion about home and auto insurance. Many people rely on outdated assumptions or secondhand advice when choosing coverage, and those misunderstandings can lead to major financial trouble when an accident or loss occurs.

Below, we break down eight persistent insurance myths and explain what’s actually true—so you can make confident, informed decisions about your protection.

Myth #1: “Red cars cost more to insure.”

The idea that car color affects insurance pricing has stuck around for years, but it simply isn’t true. Insurance carriers don’t consider color when calculating your rate. Instead, they look at details like your vehicle’s make and model, age, engine type, safety features, mileage, and your driving record. Color never factors into the equation.

Myth #2: “I only need flood insurance if I live in a flood zone.”

Flooding can happen anywhere—not just in high‑risk zones. In fact, about a quarter of all flood insurance claims come from areas outside designated flood zones. Even more important, standard homeowners insurance policies typically exclude flood damage. If your region gets rainfall, flooding is a possibility, and a flood insurance policy is worth evaluating.

Myth #3: “Older cars don’t need full coverage.”

Although older vehicles lose value over time, liability coverage is still required in most states no matter how old your car is. And if you depend on your vehicle and couldn’t easily afford repairs or a replacement after an accident, maintaining comprehensive or collision coverage may still be a wise choice. It's all about what you can reasonably afford to risk.

Myth #4: “My homeowners insurance covers everything I own.”

Homeowners policies include personal property protection, but the amount is usually tied to a percentage of your home’s insured value. High‑value items such as jewelry, collectibles, sports memorabilia, or high‑end electronics may exceed those limits. To fully protect them, you may need to add scheduled coverage or a separate endorsement.

Myth #5: “Anyone who drives my car is automatically covered.”

Your insurance may extend to someone who occasionally drives your car with permission, but it isn’t a blanket rule. Coverage becomes more complicated when that person uses the car regularly or for business, delivery work, or ridesharing. If someone else often drives your vehicle, it’s crucial to confirm they’re properly covered under your policy.

Myth #6: “I don’t need homeowners insurance because I have strong savings.”

Even a healthy savings account might not withstand the financial impact of a major loss. Homeowners insurance covers far more than the structure itself—it also includes liability protection, loss‑of‑use coverage if you’re temporarily unable to live in your home, and personal belongings. Considering the average cost to rebuild a home now exceeds $320,000, going uninsured is an enormous gamble.

Myth #7: “My car insurance automatically covers rental cars.”

Many auto policies do provide rental coverage, but typically only for personal use. If you’re renting for work travel or commercial purposes, your personal policy may not apply. Before turning down the rental company’s insurance, double‑check what your policy actually covers.

Myth #8: “My credit score doesn’t affect my insurance rates.”

In many states, insurers use a credit‑based insurance score when setting premiums. Studies have shown that certain credit behaviors correlate with risk levels, which is why this factor is sometimes included. If your credit has improved recently, it may be worth speaking with your agent to see whether it could lower your rate.

Quick Tips to Prevent Coverage Gaps

A few simple habits can help ensure your policies stay aligned with your needs:

• Review your policy every year, especially after significant life changes.
• Ask about exclusions—understanding what isn’t covered is just as important as knowing what is.
• Keep an updated inventory of your belongings, including photos and estimated values, to simplify future claims.
• Know the difference between “replacement cost” and “actual cash value,” as this impacts how much you’ll receive after a loss.

It’s helpful to pause and ask yourself: “If I had to file a claim tomorrow, would I be financially prepared?”

When Should You Revisit Your Policy?

Your life evolves, and your insurance should evolve with it. Consider reviewing your coverage when any of the following happen:

• You purchase or sell a home or vehicle
• You complete major renovations or upgrades
• You get married, divorced, or welcome a child
• A teen or new driver joins your household
• You launch a business or start a side hustle
• Your income, credit score, or financial circumstances change

Whether you’ve believed one of these myths in the past or simply want to confirm that your coverage fits your current needs, now is a great time to review your policies. Staying informed helps you avoid unwelcome surprises and ensures you’re protected when life throws the unexpected your way.

We’re here to help you navigate your options and keep your coverage strong. Reach out anytime to schedule a no‑pressure policy review and get personalized guidance you can trust.