8 Common Insurance Myths You Should Stop Believing

Debunking Day on March 11th is all about clearing up misconceptions, making it the perfect opportunity to revisit some long‑standing myths about home and auto insurance. Many people make decisions based on outdated assumptions or half‑true information, which can lead to unpleasant financial surprises when they need coverage the most.

Below, we break down eight widespread insurance myths and explain what’s actually true so you can better understand your protection and avoid costly mistakes.

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

There’s a persistent belief that colorful cars—especially red ones—come with higher insurance premiums. In reality, insurers don’t factor vehicle color into your rate at all. What truly influences your premium are details like the car’s make, model, age, safety features, engine size, and how and where you drive. Your personal driving record also plays a major role. The color of your paint job simply doesn’t matter.

Myth #2: “Flood insurance is only necessary in flood zones.”

This myth can create major financial risk. Flooding isn’t exclusive to high‑risk areas, and roughly a quarter of all flood insurance claims actually originate outside designated flood zones. Even more concerning, most standard homeowners policies do not cover flood damage. If you experience rainfall of any kind where you live, it’s worth considering flood insurance as part of your protection plan.

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

Although an older vehicle may have a lower market value, that alone doesn’t determine whether you should drop certain coverages. Liability coverage is still required in most states regardless of your car’s age. And if you depend on your vehicle for day‑to‑day life and couldn’t easily cover major repairs or a total loss on your own, collision and comprehensive coverage may still be worthwhile. The key is evaluating your personal financial situation—not just the car’s age.

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

Homeowners insurance does protect personal belongings, but only up to certain limits. Coverage is typically capped at a percentage of your home’s insured value, and high‑value belongings like jewelry, art, collectibles, or specialized electronics can exceed those limits. To fully protect these items, you may need to add a scheduled personal property endorsement or a separate policy.

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

Your auto policy may extend to others who occasionally borrow your car, but that doesn’t mean every situation is covered. Business use—such as delivery driving or ridesharing—may fall outside your policy’s protections. If someone regularly uses your vehicle or drives it for work, it’s important to confirm they’re properly listed on your policy to avoid unexpected gaps in coverage.

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

A solid savings account is helpful, but not nearly enough to replace what homeowners insurance covers. Beyond the structure of your home, your policy also includes liability protection, loss‑of‑use coverage if your home becomes uninhabitable, and personal property protection. With the average cost to rebuild a home now exceeding $320,000, paying out‑of‑pocket for a major loss could easily drain even the most robust emergency fund.

Myth #7: “Rental cars are automatically covered by my auto insurance.”

While many personal auto policies do extend to rental vehicles, that coverage usually applies only when the rental is for personal use. If you’re renting a car for business travel or commercial activity, your personal policy may not protect you. Always confirm the details before turning down rental company coverage so you’re not caught off guard later.

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

In many states, insurers use a credit‑based insurance score when calculating premiums. These scores aren’t about borrowing money—they reflect patterns that statistically correlate with claim risk. If your credit has improved recently, it’s worth checking with your agent to see if you qualify for better rates.

Quick Tips to Prevent Coverage Gaps

Being proactive with your insurance helps ensure your protection grows alongside your needs. Here are some practical ways to stay prepared:

• Review your policy once a year, especially after major life or property changes.
• Ask your agent to clarify exclusions so you understand exactly what isn’t covered.
• Keep an updated inventory of your belongings, along with photos or documentation when possible.
• Learn the difference between “replacement cost” and “actual cash value,” as these can significantly impact claim payouts.

It can also be helpful to occasionally ask yourself, “If I had to file a claim tomorrow, would I be financially prepared?” Honest answers can reveal potential gaps you may not have considered.

When to Reevaluate Your Insurance Coverage

Life changes quickly, and your insurance should adapt with it. Consider reviewing your policy whenever you:

• Buy or sell a home or vehicle
• Complete a renovation or major upgrade
• Experience a major life event, such as marriage, divorce, or welcoming a child
• Add a new driver to your household—especially a teenager
• Launch a business or side gig
• See changes in your financial situation, credit score, or income

Whether you’ve subscribed to these insurance myths in the past or simply want to ensure you’re fully protected, now is an excellent time to revisit your coverage. Understanding what your policies truly offer can help you avoid costly surprises down the road.

We’re here to help you make informed decisions and ensure your protection matches your needs. Reach out any time to schedule a simple, stress‑free policy review and stay confident in your coverage.