8 Common Insurance Myths That Could Leave You Unprotected

March 11th is Debunking Day, making it the perfect moment to clear up some of the most persistent misunderstandings about home and auto insurance. Many people make decisions based on outdated assumptions or hearsay, and unfortunately, that misinformation can cost them when they need coverage the most.

Let’s break down eight widespread insurance myths and uncover what’s actually true.

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

The truth: Your car’s color has zero influence on your insurance premium. Insurers don’t factor in paint color at all. What does affect your rate are things like the car’s make and model, its age, safety ratings, engine size, mileage, where you drive, and your driving record. A red car won’t raise your rate—but a risky driving history might.

Myth #2: “Only people in flood zones need flood insurance.”

The truth: Flooding isn’t limited to high‑risk zones. Roughly 25% of flood insurance claims come from areas outside the designated flood zones. Even more important, standard homeowners policies typically do not cover flood damage. If you live anywhere it rains—which is almost everywhere—flood insurance is worth a serious look.

Myth #3: “I don’t need full coverage on an older car.”

The truth: While aging vehicles do decline in value, liability coverage is still legally required in most states. Plus, if an accident would leave you unable to repair or replace your vehicle out of pocket, keeping collision or comprehensive coverage can still be a smart move. Age alone doesn’t determine whether full coverage is right for you—your financial situation and reliance on your vehicle do.

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

The truth: Homeowners insurance does include personal property protection, but it’s capped at a certain percentage of your dwelling coverage. High‑value items (like jewelry, artwork, collectibles, or premium electronics) often exceed those limits. To fully safeguard these belongings, you may need to add endorsements or purchase separate scheduled coverage.

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

The truth: Coverage for other drivers isn’t guaranteed. Many policies do extend protection to someone who occasionally borrows your car with permission, but there are exceptions—especially when the vehicle is used for business, deliveries, or rideshare driving. If someone in your household drives your car regularly, or if it's used for work, it’s important to confirm that your policy fully covers those scenarios.

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

The truth: Even a solid emergency fund may not be enough to handle a major loss. Homeowners insurance covers much more than the structure—it also offers liability protection, coverage for personal belongings, and help with living expenses if your home becomes uninhabitable. And with the cost to rebuild a home now averaging over $320,000, going without insurance creates enormous financial risk.

Myth #7: “My auto policy automatically covers rental cars.”

The truth: Many personal auto policies extend to rental vehicles, but usually only for personal use. If you’re renting a car for business travel or anything work‑related, your personal policy may not apply. Always check your coverage details before turning down the rental company’s insurance option.

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

The truth: In many states, insurers use a credit‑based insurance score to help determine your premium. Research shows a connection between certain credit behaviors and risk. If your credit has improved, it’s worth letting your agent know—you may qualify for a better rate.

Quick Tips to Prevent Coverage Gaps

Staying proactive about your insurance can save you from expensive surprises. Consider these helpful habits:

• Review your insurance policies every year, especially after major life or property changes.
• Ask your agent about exclusions so you're clear on what isn’t covered.
• Keep a record of your belongings—photos and estimated values can make claims easier.
• Understand the difference between replacement cost and actual cash value, as it affects your payout after a loss.

A helpful question to consider: Would you be financially secure if you needed to file a claim tomorrow?

When to Reevaluate Your Insurance Coverage

Your life evolves, and your insurance should evolve with it. It’s a good time to reassess your policies when:

• You buy or sell a home or vehicle.
• You complete renovations or significant upgrades.
• You get married, divorced, or welcome a child.
• A teen or new driver joins your household.
• You start a business or side hustle.
• Your financial situation or credit score changes.

Whether you’ve held onto one of these misconceptions or simply want to confirm that your coverage still fits your needs, now is an ideal time to take a closer look. We’re here to guide you, answer questions, and help ensure there are no unexpected gaps in your protection. Reach out anytime for a quick, no‑pressure policy review.