8 Common Insurance Myths That Could Leave You Exposed

March 11th is Debunking Day, making it the perfect opportunity to clear up some long‑standing misunderstandings about home and auto insurance. Many people make decisions based on assumptions or outdated information, which can lead to costly surprises when they need coverage the most.

To help you stay protected, we’re breaking down eight widespread insurance myths—and what you should actually believe instead.

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

 

Color has nothing to do with your auto insurance rate. Insurers don’t factor in whether your car is red, blue, or bright green. What really determines your premium are things like the vehicle’s make and model, age, engine type, safety features, where and how often you drive, and your driving history. The paint color doesn’t play a role.

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

 

Flooding isn’t limited to areas labeled “high‑risk.” In fact, roughly a quarter of flood insurance claims come from outside those zones. Even more surprising, most standard homeowners policies don’t cover flood damage at all. If your area gets rain—and nearly everywhere does—it’s worth considering flood coverage.

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

 

While older cars lose value over time, liability coverage is still legally required in most states. And even if your car isn’t worth much, think about what would happen if it were damaged or totaled. If the cost to repair or replace it would strain your finances, keeping collision and comprehensive coverage may still be a smart choice.

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

 

Homeowners policies do include personal property protection, but the coverage amount is usually limited to a percentage of your home’s insured value. High‑value items—such as jewelry, collectibles, or expensive electronics—can exceed those limits. To fully protect these belongings, you may need to separately schedule them with additional endorsements or specialized policies.

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

 

Coverage isn’t always automatic. Many policies extend protection to occasional drivers using your vehicle with permission, but there are important exceptions. Business use, delivery driving, and rideshare activity can fall outside standard coverage. If someone else regularly drives your car or uses it for work, make sure they’re properly listed or insured.

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

 

Your savings may not go nearly as far as you think after a major loss. Homeowners insurance covers more than your house—it also includes liability protection, loss-of-use coverage if you need temporary housing, and personal property protection. Considering the average cost to rebuild a home now exceeds $320,000, choosing to go without insurance is a significant financial gamble.

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

 

While many personal auto policies do extend to rental vehicles, that protection usually applies only for personal use. If you rent a car for business or commercial activities, your policy may not cover it. Before declining the rental company’s insurance, it’s worth checking the details of your own policy.

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

 

In many states, insurers use what’s known as a credit‑based insurance score to help determine premiums. Data has shown a connection between credit patterns and risk levels. If your credit has recently improved, it might be a good time to check in with your agent—your improved score could qualify you for better pricing.

Quick Tips to Prevent Coverage Gaps

 

Staying proactive about your insurance can help you avoid stress and financial setbacks. Here are some helpful habits:

• Review your policies annually, especially after major life events.
• Ask your agent to explain exclusions—understanding what’s not covered is crucial.
• Document your belongings or vehicle details with photos to make future claims easier.
• Learn the difference between “replacement cost” and “actual cash value”—it can change your payout.

It’s also worth asking yourself: “Would I be financially prepared if I had to file a claim tomorrow?”

When to Revisit Your Insurance Coverage

 

Life changes quickly, and your insurance should evolve with it. Consider reviewing your policies whenever:

• You purchase or sell a home or car.
• You complete a renovation or major upgrade.
• Your family structure changes through marriage, divorce, or a new child.
• A new driver joins your household.
• You start a business or take on a side hustle.
• Your income, credit score, or overall financial situation shifts.

If any of these myths sounded familiar—or if you’re simply unsure whether your current coverage still fits your needs—now is a great time to take a fresh look.

We're here to help you make confident, informed decisions and avoid unwelcome surprises. Reach out anytime to schedule a quick, no‑pressure review of your policies.