8 Common Insurance Myths That Could Leave You Exposed

With Debunking Day coming up on March 11th, it’s the perfect moment to clear up some long-standing confusion around home and auto insurance. Many people still base their decisions on outdated assumptions or misinformation, which can lead to costly surprises when something goes wrong.

To help you stay protected, here’s a refreshed look at eight widespread insurance myths—and the real facts you should trust instead.

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

The truth: The color of your vehicle has zero effect on your insurance rate. Insurers focus on details such as the car’s make and model, age, engine type, safety features, your driving habits, and your accident history. Whether your car is red, blue, or purple, the paint job doesn’t influence your premium.

Myth #2: “Flood insurance only matters if I live in a flood zone.”

The truth: Flooding isn’t limited to high-risk regions. Approximately one-quarter of all flood insurance claims come from places outside designated flood zones. What surprises many homeowners is that most standard home insurance policies do not cover flood-related damage. If your area gets rain—and almost everywhere does—flood insurance deserves consideration.

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

The truth: While aging vehicles lose value over time, liability coverage is generally required by law regardless of the car’s age. And if you rely on your car for daily transportation and a major repair or replacement would strain your budget, keeping collision or comprehensive coverage may still be the smartest move.

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

The truth: Homeowners insurance does include personal property protection, but there are limits—typically tied to a percentage of your home’s overall insured value. High-end items like jewelry, fine art, collectibles, or specialized electronics can easily exceed those limits. To ensure full coverage, you may need to list those valuables individually through special endorsements or separate policies.

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

The truth: Coverage typically extends to occasional drivers with your permission, but there are important exceptions. Situations involving business use—like delivery driving or rideshare services—often fall outside personal auto coverage. And if someone uses your car regularly, make sure they’re properly listed on your policy to avoid surprises.

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

The truth: Even a solid emergency fund might not be enough to cover a full-scale disaster. Homeowners insurance doesn’t just protect your house—it also provides liability protection, assists with temporary living expenses if your home becomes uninhabitable, and covers your personal belongings. With rebuilding costs now averaging more than $320,000, going without insurance can be financially devastating.

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

The truth: Many car insurance policies do offer some coverage for rental vehicles, but usually only for personal travel. If you’re renting a car for business purposes, your personal policy may not apply. Before turning down the rental company’s insurance, take a moment to double-check your coverage.

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. This is because data has shown a correlation between certain credit behaviors and the likelihood of filing a claim. If your credit score has been trending upward, it may be worth discussing possible savings with your agent.

Smart Ways to Prevent Coverage Gaps

Staying informed and checking in on your policies regularly can help you avoid unexpected out-of-pocket expenses. Here are a few best practices to keep you protected:

• Review your insurance annually, especially after major changes in your life or home.
• Ask your agent to clarify exclusions—understanding what’s not covered is just as crucial as knowing what is.
• Create a home inventory or keep updated photos and estimates of your belongings and vehicles to simplify future claims.
• Learn the difference between “replacement cost” and “actual cash value,” as each impacts your payout after a loss.

It’s helpful to ask yourself: “Could I comfortably handle the financial hit if I had to file a claim tomorrow?”

Key Moments to Revisit Your Insurance Policies

Your life evolves—and your insurance should keep pace. Consider reassessing your coverage whenever you experience one of the following:

• Buying or selling a home or vehicle
• Completing major renovations or home improvements
• Experiencing life events such as marriage, divorce, or welcoming a child
• Adding a new driver to the household (teen drivers included!)
• Launching a business, freelancing, or taking on a side gig
• Seeing significant changes in your income, credit score, or financial situation

Whether you’ve held onto one of these myths or simply want to confirm your protection is up to date, now is a great opportunity to take a closer look at your coverage.

Our team is always here to help you understand your options, strengthen your protection, and avoid costly gaps. Reach out anytime to schedule a simple, no-pressure policy review.