8 Common Insurance Myths That Could Leave You Unprotected

Clearing Up the Confusion Around Home and Auto Insurance

March 11th is Debunking Day, making it the perfect moment to tackle some of the biggest misunderstandings people have about their insurance coverage. Many policyholders rely on assumptions, outdated information, or simple misconceptions—often without realizing the risks these beliefs create. When a major loss happens, the wrong information can lead to costly surprises.

To help you stay better protected, here’s a fresh look at eight long-standing insurance myths—and what the facts really reveal.

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

The truth: Your car’s color has zero impact on your insurance premium. Insurers don’t charge more for red, blue, silver, or any other paint color. What they do evaluate are factors like the vehicle’s make and model, safety ratings, age, engine size, and even how many miles you typically drive. Your driving record also plays a big role. Color simply isn’t part of the equation.

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

The truth: Flooding can occur just about anywhere—high-risk zone or not. Roughly 25% of flood insurance claims are filed by homeowners who live outside designated flood zones. Even more surprising, most standard homeowners policies do not include flood coverage at all. If there’s any chance of heavy rain where you live, it’s worth looking into whether flood insurance makes sense for you.

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

The truth: While older vehicles may lose value over time, liability insurance is still required in most states regardless of the car’s age. Beyond that, the decision to drop collision or comprehensive coverage depends on your situation. If your car is essential for your daily life and a major repair or total loss would be financially difficult to absorb, maintaining broader coverage can still be a smart move.

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

The truth: Homeowners insurance does include protection for personal belongings, but there are limits. Coverage is typically capped at a percentage of your home’s insured value. High-value items—such as jewelry, collectibles, artwork, musical instruments, or specialized electronics—may exceed standard limits. To fully protect these items, you may need to add a separate endorsement or policy specifically for them.

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

The truth: Permission-based coverage isn’t always universal. While your auto policy may extend to someone you occasionally allow behind the wheel, that doesn’t apply in all situations. Business-related driving, delivery work, and rideshare use often introduce coverage gaps. If another driver regularly uses your car, or drives it for income, you should confirm they’re properly insured under your policy.

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

The truth: Even a well-funded emergency account may not be enough to cover the loss of a home or a major liability claim. Homeowners insurance protects more than the structure—it includes liability protection if someone gets hurt on your property, additional living expenses if you can’t stay in your home, and coverage for personal belongings. Considering that rebuilding a home can easily exceed $320,000 today, skipping coverage is a high-stakes gamble.

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

The truth: Your personal auto policy often does extend to rental vehicles—but usually only for personal use. If you’re renting a car for business travel or commercial purposes, your coverage may not apply. Before declining the rental company’s insurance, it’s wise to double-check what your policy actually allows.

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

The truth: In many states, insurers use what’s called a credit-based insurance score when calculating premiums. These scores help predict the likelihood of future claims. If your credit has recently improved, it may be worth discussing with your agent—you could qualify for a better rate.

Tips to Stay Properly Protected

Being proactive can go a long way in preventing coverage gaps. Here are several helpful steps:

• Review your policy annually, especially after major life or property changes.
• Ask your agent to walk you through exclusions so you know exactly what isn’t covered.
• Keep an updated home inventory—photos, receipts, and item values make claims easier.
• Understand the difference between “replacement cost” and “actual cash value,” since it affects how much you’ll receive after a loss.
• Consider whether you’d be financially comfortable filing a claim tomorrow with your current coverage.

Key Moments to Revisit Your Policy

Life doesn’t stand still, and your insurance shouldn’t either. Plan to revisit your coverage whenever:

• You buy or sell a car or home
• You complete a renovation or major improvement
• You get married, divorced, or welcome a child
• A teenager or new driver joins the household
• You launch a new business or side project
• Your financial situation or credit score changes significantly

Whether these myths were new to you or simply served as a reminder, now’s a great time to ensure your insurance still fits your needs. We’re here to help you stay informed, confident, and protected. Reach out anytime to schedule a quick, no-pressure policy review.