8 Common Insurance Myths You Should Stop Believing

Debunking Day on March 11th is a great reminder that not everything we hear about insurance is true. Many homeowners and drivers make decisions based on old assumptions or misleading information, and that can create serious gaps in coverage when the unexpected happens.

To help clear things up, here’s a fresh look at eight widespread insurance myths—along with what you should actually keep in mind.

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

Despite the staying power of this myth, the color of your vehicle has no influence on your insurance rate. Carriers focus on details that indicate risk, such as the age and model of your car, its safety ratings, any specialty features, how often you drive, where you drive, and your driving record. The paint color plays absolutely no role in your premium.

Myth #2: “Flood insurance is only for homes in flood zones.”

Flooding is far more common than most people realize. Roughly a quarter of all flood-related insurance claims come from properties located outside high-risk zones. Unfortunately, most standard homeowners policies don’t include flood protection. If your community experiences rainstorms—as most do—it’s worth considering whether a flood policy belongs in your coverage plan.

Myth #3: “An older car doesn’t need full coverage.”

While older vehicles lose value over time, that doesn’t necessarily mean you should drop key protections. Liability coverage is still required in most states, no matter how old your car is. And if you depend on that vehicle and would struggle to pay for major repairs—or replace the car entirely—after a serious accident, collision and comprehensive coverage can still be an important safety net.

Myth #4: “My homeowners policy covers everything in my house.”

Your homeowners insurance does include personal property coverage, but those limits are tied to a percentage of your home’s insured value. High-value items—like jewelry, art, collectibles, or top-tier electronics—can quickly exceed those caps. If you want full protection for these belongings, scheduling them individually through endorsements or separate policies is often the best approach.

Myth #5: “Anyone driving my car is fully insured.”

Coverage doesn’t extend universally to every person who gets behind your wheel. While your policy may protect occasional drivers who have your permission, that doesn’t always apply to business use, delivery services, or rideshare driving. If someone uses your car often or for work, double-check your policy to make sure there aren’t any coverage gaps.

Myth #6: “A strong savings account means I don’t need homeowners insurance.”

Even a well-funded emergency account often can’t cover the full cost of a major disaster. Homeowners insurance goes beyond protecting the structure itself—it also provides liability coverage, loss of use if you’re unable to live in your home, and protection for your personal belongings. Considering that the average rebuild cost now exceeds $320,000, skipping this coverage can be extremely risky.

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

Many personal auto policies do offer coverage for rental cars, but typically only when used for personal travel. If you're renting a vehicle for business purposes, that protection might not apply. Before waving off the rental company’s coverage, take a moment to confirm your policy details so you're not caught off guard.

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

In several states, insurers do use a credit-based insurance score as part of determining your premium. This is because certain financial patterns can correlate with claim risk. If your credit standing has recently improved, it may be worthwhile to check in with your agent—you could qualify for a reduced rate.

Quick Tips to Prevent Costly Coverage Gaps

Staying informed about your insurance needs can make a big difference when life throws a curveball. These simple habits can help keep your coverage aligned with your needs:

• Review your insurance policies once a year, especially after major life events.
• Ask your agent to explain exclusions—knowing what isn’t covered is just as crucial as knowing what is.
• Document your belongings with photos, lists, or receipts to streamline future claims.
• Learn the difference between actual cash value and replacement cost, as this can dramatically affect your payout after a loss.

It’s also helpful to periodically ask yourself: “Would I be financially stable if I needed to file a claim tomorrow?” If the answer isn’t a clear yes, it may be time to reassess your coverage.

When to Revisit Your Insurance Coverage

Life changes quickly, and your insurance should keep pace. It’s a good idea to re-evaluate your policies when any of the following occur:

• You buy or sell a home or vehicle.
• You complete renovations or upgrades that increase your home’s value.
• You get married, divorced, or welcome a new child.
• A teenager or new driver joins your household.
• You begin a business or side venture that may require additional protections.
• Your income, credit score, or financial situation shifts.

Whether you’ve believed one of these myths or just want peace of mind that your policies still fit your lifestyle, now is an ideal time for a review. Staying informed is one of the best ways to avoid unwelcome surprises.

We’re here to help you understand your options and make confident decisions. Reach out anytime to schedule a quick, no-pressure review of your coverage.