Debunking 8 Common Insurance Myths That Could Leave You Vulnerable

With Debunking Day coming up on March 11th, there’s no better opportunity to clear up some of the most persistent misconceptions surrounding home and auto insurance. Many people base their coverage decisions on outdated assumptions or hearsay, and unfortunately, that misinformation can lead to costly surprises when a claim arises.

To help you stay properly protected, here’s a fresh look at eight widespread insurance myths—along with the reality behind each one.

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

The truth: Your car’s paint color has absolutely no impact on your insurance premium. Whether your vehicle is red, blue, silver, or black, insurers simply don’t factor color into their pricing. What does influence your rate are practical details such as the vehicle’s make and model, age, safety features, engine size, how you use it, and your personal driving record. Color never enters the equation.

Myth #2: “Only people in flood zones need flood insurance.”

The truth: Flooding is far from limited to designated high-risk regions. Roughly a quarter of flood insurance claims originate outside traditional flood zones, catching many homeowners off guard. Even more important to understand: most standard homeowners insurance policies do not cover flood-related damage. If there’s any chance of heavy rain or rising water in your area, it’s worth exploring whether flood insurance makes sense for you.

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

The truth: While an older vehicle may have a lower market value, the decision to drop certain types of coverage isn’t always straightforward. Liability coverage is still required in most states regardless of your car’s age. Additionally, if losing or repairing your vehicle after an accident would cause financial strain, having collision or comprehensive coverage can still provide important protection. The age of your car shouldn’t be the only factor in your decision.

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

The truth: Homeowners insurance does include personal property coverage, but the limits are often tied to a percentage of your home’s insured value. High-value belongings—such as heirloom jewelry, specialty collections, or premium electronics—may exceed those standard limits. To ensure these items are fully insured, you may need to schedule them individually or add special endorsements.

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

The truth: Coverage for other drivers isn’t always guaranteed. Many policies extend protection to occasional drivers who have your permission, but there are important exceptions. Business use, delivery driving, and rideshare driving often require additional or separate coverage. If someone frequently uses your car or drives it for work-related activities, it’s essential to verify that they’re adequately covered under your policy.

Myth #6: “I can skip homeowners insurance if I have good savings.”

The truth: Even a well-funded savings account may not withstand the financial hit of a major event like a fire, severe storm, or large liability claim. Homeowners insurance covers your dwelling, personal belongings, temporary living expenses if your home becomes uninhabitable, and liability if someone is hurt on your property. Considering that rebuilding a home now averages more than $320,000, choosing to go without coverage could expose you to tremendous financial risk.

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

The truth: Many personal auto policies do extend to rental cars—but usually only when the rental is for personal use. If you’re renting a vehicle for work travel or commercial purposes, your personal policy may not apply. Before refusing coverage offered by the rental company, it’s wise to double-check your policy details.

Myth #8: “Insurance rates aren’t affected by credit score.”

The truth: In several states, insurers use a credit-based insurance score to help determine premiums. These scores are grounded in data that links certain credit behaviors with likelihood of filing claims. If your credit score has improved recently, it may be worth asking your agent whether that progress could lower your premium.

Smart Tips to Avoid Coverage Gaps

Staying ahead of your coverage needs can help you prevent unwelcome surprises later. Here are a few proactive habits that make a big difference:

• Look over your policy each year—especially after major life events or big purchases.
• Ask your agent about exclusions so you know exactly what isn’t included in your policy.
• Create a home inventory or keep updated photos and records of your belongings and vehicle to simplify the claims process.
• Learn the difference between “replacement cost” and “actual cash value,” as the distinction affects how much you’ll receive after a loss.

A helpful question to reflect on: If you had to file a claim tomorrow, would you feel financially prepared?

When to Revisit Your Insurance Coverage

Life doesn’t stand still, and your insurance shouldn’t either. It’s a good idea to reassess your policies when:

• You buy, sell, or significantly upgrade a home or car
• You make major improvements or renovations to your property
• Your household changes due to marriage, separation, or a new child
• A teen or new driver joins your family
• You launch a business or side gig from your home
• Your income, credit score, or overall financial circumstances shift

If any of these myths sounded familiar—or if you’re simply unsure whether your current coverage still fits your life—now is the perfect moment to take a closer look. Understanding your policy helps ensure you’re protected when it matters most.

We’re here to help you make confident, informed decisions about your insurance. Reach out anytime to schedule a quick, no-pressure review of your current coverage.