Clearing Up 8 Common Insurance Myths That Could Leave You Exposed

With Debunking Day coming up on March 11th, it’s the perfect moment to revisit some long-standing misunderstandings about home and auto insurance. Many people make coverage decisions based on assumptions they’ve heard over the years, and unfortunately, those misconceptions can have real financial consequences when it’s time to file a claim.

To help you stay fully protected, we’re breaking down eight popular insurance myths—and what you should truly rely on instead.

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

The truth: The color of your car has zero effect on your insurance premium. Insurers don’t consider appearance when calculating rates. What actually matters are things like the car’s make and model, safety features, age, engine type, how often you drive, and your driving record. Whether your car is red, blue, silver, or green, color is never a pricing factor.

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

The truth: Flooding can happen almost anywhere, not just in designated high-risk areas. Roughly a quarter of all flood-related claims come from outside official flood zones. What’s more, standard homeowners insurance typically does not include flood coverage. If storms and heavy rain are common where you live, it’s worth exploring a flood insurance policy for added protection.

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

The truth: While older vehicles may lose value over time, liability insurance is still legally required in most states. And if your car is essential to your daily routine—and an unexpected repair or replacement would strain your budget—collision and comprehensive coverage may still be worth keeping. The age of your vehicle shouldn’t be the only factor when deciding what to keep or remove.

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

The truth: Your policy does include personal property coverage, but there’s usually a limit based on a percentage of your home’s insured value. High-value pieces such as jewelry, collectibles, specialty equipment, or premium electronics may exceed those limits. To fully protect those items, you might need additional scheduled coverage or a separate policy.

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

The truth: Permission alone doesn’t guarantee full coverage. Many policies extend protection to occasional drivers, but restrictions still apply—especially with business use, delivery driving, and rideshare work. If someone regularly uses your vehicle or drives it for income, it’s important to confirm they’re listed on your policy or have the proper coverage.

Myth #6: “Good savings mean I don’t need homeowners insurance.”

The truth: Even if you have a strong financial cushion, rebuilding or repairing a home after a major loss can quickly exceed what most people can comfortably pay out of pocket. Homeowners insurance protects not only your residence, but also your belongings, liability exposure, and even living expenses if you temporarily can’t stay in your home. With rebuilding costs averaging well over $320,000 today, skipping insurance is a major gamble.

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

The truth: Your personal auto policy often covers rental vehicles—but only for personal use. Rentals for business trips or commercial activities usually fall outside your standard policy. Before declining the rental company’s insurance option, check whether your auto policy extends to the type of trip you’re taking.

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 premiums. Research shows a statistical connection between credit behavior and claim risk. If your credit has recently improved, it’s worth reaching out to your agent—your rates might benefit from it.

Quick Tips to Prevent Coverage Gaps

Taking a proactive approach to your insurance can help you avoid unpleasant surprises later on. A few smart habits include:

• Reviewing your policy once a year, especially after significant life changes.
• Asking your agent to explain exclusions so you understand what isn’t covered.
• Keeping an updated inventory of your belongings or photos of your vehicle to streamline potential claims.
• Learning the difference between “replacement cost” and “actual cash value,” as this affects what you receive after a loss.
• Regularly asking yourself whether you’d be financially prepared if you had to file a claim tomorrow.

When It’s Time to Revisit Your Policy

Life moves quickly, and your insurance should adapt along with it. Plan to review your policy anytime:

• You buy or sell a home or car
• You complete a renovation or major upgrade
• Your family structure changes—marriage, divorce, or a new child
• A teen or new driver joins the household
• You start a side business or full-time venture
• Your income or credit score sees a significant shift

Whether you’ve found yourself believing one of these myths or simply want to make sure your coverage still fits your needs, now is the ideal time for a closer look. We’re here to help you feel confident and informed every step of the way.

If you’d like a quick, no-pressure review of your policies, reach out anytime. We’re always happy to help make sure you’re fully covered.