Debunking 8 Common Insurance Myths That Could Leave You Exposed

March 11th is recognized as Debunking Day, making it the ideal moment to clear up some of the most persistent misconceptions surrounding home and auto insurance. Many people rely on assumptions or outdated information when choosing coverage, and unfortunately, those misunderstandings can lead to costly surprises when the unexpected happens.

To help you stay protected, let’s walk through eight widely believed insurance myths—and the real truths you should know instead.

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

The truth: The color of your car has zero influence on your insurance premium. Insurers focus on factors such as your vehicle’s age, make and model, safety features, engine size, and how and where you drive. Your personal driving record also plays a major role. Paint color, no matter how bold, isn’t part of the equation.

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

The truth: Flooding can happen almost anywhere. Roughly a quarter of all flood claims come from areas outside designated high‑risk zones. It’s also important to know that standard homeowners policies typically exclude flood damage. If rainfall is a regular part of your climate, it’s worth exploring flood insurance as an added layer of protection.

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

The truth: While older vehicles may drop in value over time, liability coverage is still required in most states regardless of age. And if you depend on your car and couldn’t easily pay for significant repairs or replacement after an accident, keeping collision and comprehensive coverage might still be a smart move.

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

The truth: Homeowners policies do include personal property protection, but coverage limits are often tied to a percentage of your home’s insured value. High‑value items—such as jewelry, collectibles, or premium electronics—can exceed these limits. To fully protect speciality or expensive belongings, you may need to schedule them separately through endorsements or additional policies.

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

The truth: Coverage isn’t guaranteed for every situation. Most policies extend protection to occasional drivers you’ve given permission to use your car, but there are exceptions. Business use, delivery driving, and rideshare activity can all fall outside your standard policy. If someone uses your vehicle regularly—or for work—confirm that your policy covers their specific usage.

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

The truth: Even a strong savings account may not be enough to recover from a major loss. Homeowners insurance protects more than just the structure—it includes liability coverage, personal property protection, and reimbursement for additional living expenses if your home becomes uninhabitable. With the average rebuilding cost now exceeding $320,000, skipping coverage can create significant financial risk.

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

The truth: Many personal auto policies do extend to rental cars, but typically only for personal travel. Rentals used for business or commercial purposes often fall outside personal policy terms. Before declining insurance at the rental counter, check your policy details so you know what’s actually covered.

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

The truth: In many states, insurers use credit‑based insurance scores when determining premiums. This is because data shows a statistical connection between credit behavior and claims risk. If your credit has improved, it may be worth contacting your agent—your premium could benefit from the change.

Quick Tips to Prevent Coverage Gaps

Taking a proactive approach to managing your policies can keep you better protected. A few helpful steps include:

• Reviewing your policy each year, especially after major life events.
• Asking your agent about exclusions so you're aware of what isn’t covered.
• Documenting your belongings—including photos, values, or receipts—to simplify claim filing.
• Understanding the difference between “replacement cost” and “actual cash value,” since it can impact your payout after a loss.

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

When to Reevaluate Your Insurance Coverage

Life changes quickly, and your insurance should evolve along with it. You may need a policy review when:

• You buy or sell a home or vehicle.
• You finish a renovation or make significant improvements.
• You get married, divorced, or welcome a child.
• A teen or new driver joins your household.
• You start a new business or side gig.
• Your financial situation—including income or credit score—changes.

Whether you’ve relied on one of these myths in the past or simply want confidence in your current coverage, now is a great time to reassess your policies. We’re here to help you make informed choices and avoid unpleasant surprises down the road. Reach out anytime to schedule a quick, no‑pressure review.