8 Common Insurance Myths That Could Leave You Unprotected

Georgia Adams | Mar 12 2026 15:00

March 11th is Debunking Day, making it the perfect opportunity to clear up some long‑standing misunderstandings about home and auto insurance. Many people base their coverage decisions on advice that’s outdated—or just plain wrong. Unfortunately, those misconceptions can cause major financial problems when a claim actually arises. Below, we break down eight frequently believed insurance myths and explain what’s really true. Myth #1: Red cars cost more to insure The truth: Your car’s color plays zero role in determining your insurance rate. Insurers look at details like the make and model of your car, its age, safety features, engine type, where you drive, how much you drive, and your driving history. Color has no impact on your premium. Myth #2: You only need flood insurance if you live in a designated flood zone The truth: Flooding can happen almost anywhere. About a quarter of all flood insurance claims come from properties located outside high‑risk flood zones. Even more important, standard homeowners policies do not cover flood damage. If heavy rain is a possibility in your area, flood insurance is worth evaluating. Myth #3: Older cars don’t need full coverage The truth: While an older vehicle may not be worth as much, liability insurance is still required in most states regardless of your car’s age. And if you depend on your vehicle for daily transportation, paying out of pocket for repairs or replacement after an accident could be more costly than maintaining collision or comprehensive coverage. Myth #4: A homeowners policy covers everything you own The truth: Homeowners insurance does include personal property protection, but it’s typically capped at a percentage of your home’s insured value. High‑value items such as jewelry, collectibles, art, or premium electronics may go beyond those limits. For complete protection, these valuables may need to be specifically listed or insured under separate endorsements. Myth #5: Anyone who drives my car is covered by my insurance The truth: Coverage doesn’t apply automatically in all situations. While your policy may extend to occasional drivers who have your permission, restrictions apply—especially for business use, delivery driving, or rideshare activity. If someone regularly drives your car or uses it for work, verify that your policy includes the appropriate coverage. Myth #6: A strong savings account eliminates the need for homeowners insurance The truth: Even a sizable emergency fund may not be enough to handle a major loss. Homeowners insurance goes far beyond protecting your house. It also includes liability coverage, loss‑of‑use benefits if you can’t live in your home, and protection for your belongings. With the average rebuild cost surpassing $320,000, opting out of coverage is a significant financial gamble. Myth #7: Car insurance automatically covers rental cars The truth: Many auto policies do extend to rental cars, but generally only for personal use. If you’re renting a vehicle for business purposes or a commercial trip, your personal insurance might not apply. Always confirm your coverage before turning down the rental company’s insurance. Myth #8: Your credit score doesn’t influence insurance rates The truth: In many states, insurers use a credit‑based insurance score to help determine your premium. Data shows that credit habits may correlate with claim risk. If your credit profile has recently improved, it’s worth speaking with your agent—you could qualify for better rates. Quick Tips to Prevent Coverage Gaps Staying informed and keeping your policy up to date can help you avoid unpleasant surprises. Here are a few ways to protect yourself: • Review your policy each year, especially after major life or property changes. • Ask your agent about exclusions—understanding what isn’t covered is just as important as knowing what is. • Create a home inventory or keep photos and documented values of your belongings to streamline future claims. • Learn the difference between replacement cost and actual cash value, since it affects how much you’re paid after a loss. • Think honestly about whether you could comfortably handle a large claim without insurance. When You Should Revisit Your Insurance Policy Life evolves quickly, and your insurance should keep up with it. Consider reassessing your policies when: • You buy or sell a home or a car • You complete a renovation or major home improvement • You get married, divorced, or welcome a child • A new driver joins your household (especially teen drivers) • You launch a business or side gig • Your finances, income, or credit score significantly change If you’ve believed one of these myths—or just want to make sure your coverage still fits your life—now is a great moment to take a closer look. We’re here to help you make confident decisions and avoid unexpected coverage gaps. Reach out anytime for a simple, no‑pressure policy review.