8 Common Insurance Myths That Could Leave You Exposed

With Debunking Day coming up on March 11th, there’s no better moment to clear up some of the biggest misunderstandings about home and auto insurance. Many people make decisions based on half-truths, rumors, or outdated information—and unfortunately, that can lead to costly surprises when something goes wrong.

To help you stay protected, here’s a fresh look at eight persistent insurance myths and what you should actually rely on when evaluating your coverage.

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

The reality: Your car’s paint color has nothing to do with your insurance rate. Insurers look at details like the make and model, how old the vehicle is, the safety technology it includes, the engine type, how frequently you drive, and even where the car is typically kept. Your driving history plays a major role too. Color, however, doesn’t influence premiums at all.

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

The reality: Flooding is not limited to officially designated high-risk areas. In fact, roughly a quarter of flood claims come from homeowners living outside those zones. What surprises many people is that standard homeowners insurance doesn’t cover most flood-related damage. If storms, heavy rain, or rising water could impact your area, it’s worth exploring flood insurance options.

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

The reality: While older cars may be worth less on paper, there are still important factors to consider. Nearly all states require drivers to carry liability coverage regardless of vehicle age. And if you depend on your car to get around, skipping collision or comprehensive coverage may leave you vulnerable to repair or replacement costs you aren’t prepared to pay. Your comfort level with risk—and your financial situation—should guide that decision, not the car’s age alone.

Myth #4: “Homeowners insurance covers all my belongings.”

The reality: Homeowners policies do include protection for personal items, but only up to certain limits. High-value items—like jewelry, collectibles, instruments, or specialty electronics—often require additional protection because they may exceed normal policy caps. To ensure these belongings are fully insured, you may need special endorsements or separate scheduled coverage.

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

The reality: Coverage isn’t universal. Your auto policy may extend to someone driving your vehicle occasionally and with permission, but there are significant exceptions. Business use, delivery driving, and rideshare activity often require additional or different coverage. If another person routinely drives your car, it’s smart to confirm that your policy truly protects them.

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

The reality: Even a well-stocked savings account wouldn't go far after a major disaster. Homeowners insurance covers much more than the building itself—it can protect you from liability costs if someone gets hurt on your property, pay for temporary living expenses if your home becomes uninhabitable, and help replace your belongings. With the average rebuilding cost now exceeding $320,000, skipping insurance exposes you to risks most savings accounts can’t comfortably absorb.

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

The reality: Many personal auto policies do offer coverage for rental vehicles, but usually only for personal trips. Business travel or commercial uses often fall outside your policy’s limits. Before turning down the rental car company’s coverage, check what your policy actually includes so you’re not caught off guard.

Myth #8: “My credit score has nothing to do with my insurance rates.”

The reality: In many states, insurers use something called a credit-based insurance score when calculating premiums. This isn’t your regular credit score, but it’s influenced by similar financial behaviors. Since insurers often link credit patterns with the likelihood of filing claims, an improved credit profile could potentially lead to lower rates—so it’s worth asking your agent.

Smart Ways to Avoid Coverage Gaps

Being proactive with your insurance can help prevent costly oversights. Here are a few simple habits that make a big difference:

• Review your policy at least once a year, especially after significant life or household changes.
• Ask your agent to explain exclusions so you’re clear on what isn’t covered.
• Document your possessions—photos, lists, and estimated values can streamline the claims process later.
• Understand the difference between “replacement cost” and “actual cash value,” as these terms affect the payout if you experience a loss.
• Regularly reflect on whether you’d be financially secure if you had to make a claim tomorrow.

When to Update Your Insurance

Life evolves quickly, and your insurance should adjust accordingly. Make time to review your policy when:

• You buy or sell a home or car.
• You complete major renovations or upgrades.
• Your family structure changes—marriage, divorce, or welcoming a child.
• A teen or new driver joins your household.
• You launch a business or start a side gig.
• Your income, credit score, or financial situation shifts in a meaningful way.

Whether you’ve fallen for one of these misconceptions or simply want reassurance that your coverage still fits your needs, now is a great time to revisit your policies. We’re here to help you review your options, clarify confusing details, and make confident decisions that keep you protected. Reach out anytime to schedule a quick and pressure-free policy review.