Clearing Up 8 Common Insurance Myths That Could Leave You Exposed

With Debunking Day coming up on March 11th, there’s no better moment to revisit some of the most persistent misunderstandings about home and auto insurance. Many people make coverage decisions based on old assumptions, half-truths, or things they’ve heard from friends—and unfortunately, those misconceptions can create major financial trouble when real‑life risks hit.

To help you stay protected, we’re breaking down eight widely believed insurance myths and revealing what’s actually true.

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

The reality: Your vehicle’s color has zero impact on your insurance rate. Insurers don’t care whether your car is red, blue, black, or lime green. Instead, they look at details like the car’s model year, safety features, engine size, your driving habits, your ZIP code, and your driving record. Paint color isn’t part of the equation—ever.

Myth #2: “Flood insurance is only necessary if you live in a flood zone.”

The reality: Flooding can happen almost anywhere. Roughly a quarter of all flood insurance claims actually originate outside federally designated high‑risk zones. What’s more surprising is that standard homeowners insurance typically does not cover flood damage. If there’s any chance of heavy rain where you live, it’s worth considering a flood policy.

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

The reality: While older vehicles decline in value, that doesn’t necessarily mean you should drop important coverage. Most states still require liability insurance regardless of how old your car is. And if you rely on your car daily, comprehensive or collision might still be essential—especially if paying for repairs or a replacement out of pocket would be stressful or impossible.

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

The reality: Homeowners policies do include personal property protection, but that coverage is usually capped at a percentage of your home’s total insured value. High-value items—such as jewelry, collectibles, artwork, or specialized electronics—may exceed those standard limits. For full protection, these items often need to be individually listed or insured under additional endorsements.

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

The reality: While permission-based use may extend coverage in some situations, it’s far from guaranteed. Regular users of your car, delivery drivers, or people using your vehicle for work purposes may need to be listed on your policy to be fully covered. Don’t assume coverage applies universally—each policy has its own rules.

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

The reality: Even a substantial savings account may not be enough to cover the cost of a major loss. Homeowners insurance goes far beyond replacing the physical structure of your home. It also includes liability coverage, protection for personal belongings, and reimbursement for living expenses if you’re temporarily unable to stay in your home. Considering average rebuild costs now exceed $320,000, skipping insurance could leave you dangerously exposed.

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

The reality: Personal auto insurance policies often extend to rental cars—but only for personal travel. If the rental is for business purposes or commercial use, your personal policy might not apply. Before declining the rental company’s insurance, double-check the details of your existing coverage.

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

The reality: In many states, insurers use what’s known as a credit-based insurance score to help determine your premium. Research shows that credit behavior can correlate with risk, which is why insurers factor it in. If your credit has improved, it’s worth mentioning—it could result in better pricing.

Quick Tips to Keep Your Coverage Solid

Being proactive about your insurance can help prevent unwanted surprises. Here are a few simple habits that can go a long way:

• Review your policy once a year, especially after major life or property changes.
• Ask your agent about exclusions—knowing what’s not covered is just as important.
• Keep an inventory of possessions or maintain recent photos of your vehicle and valuables to ease the claims process.
• Understand the difference between “replacement cost” and “actual cash value,” as it can significantly affect reimbursement after a loss.

It’s also helpful to pause and ask yourself: Would I be financially comfortable if I had to file a claim tomorrow?

When to Revisit Your Insurance Policy

Life changes quickly, and your insurance should keep pace. Consider reviewing your coverage when:

• You purchase or sell a home or vehicle.
• You complete a renovation or major home improvement project.
• You experience a major life event such as marriage, divorce, or having a child.
• A new driver joins the household (including teens learning to drive).
• You launch a business or begin a new side hustle.
• Your financial situation, including credit score or income, shifts significantly.

Whether you’ve held on to one of these myths or simply want reassurance that your policies still align with your needs, now is a perfect time to take a closer look at your coverage. We’re here to help you sort through the details and avoid any unexpected gaps.

Reach out anytime to schedule a quick, no‑pressure policy review—we’re happy to walk you through the details and help you stay protected.