8 Common Insurance Myths That Could Leave You At Risk

With Debunking Day coming up on March 11th, it’s the perfect moment to clear up some of the confusion surrounding home and auto insurance. Misinformation spreads easily, and many people make decisions based on assumptions that haven’t been true for years—or were never true at all. Unfortunately, believing the wrong things about your coverage can leave you financially exposed when you least expect it.

Below, we break down eight frequently repeated insurance myths and uncover what’s actually true so you can protect yourself with confidence.

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

The truth: The color of your car has zero impact on your premium. Insurers don’t consider whether your vehicle is red, blue, or neon green. Instead, they look at details like the make and model, age of the vehicle, safety equipment, repair costs, your driving record, and where and how often you drive. Color simply never factors into pricing.

Myth #2: “Flood insurance is only necessary in flood zones.”

The truth: Flooding can happen almost anywhere. Roughly one in four flood claims actually originate outside of designated high-risk zones. Even more important—standard homeowners insurance doesn’t typically cover flood damage. If rainstorms are common where you live, it’s worth evaluating separate flood coverage, even if you’re not in a marked flood plain.

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

The truth: While an aging vehicle may be worth less than a new one, it doesn’t mean you should automatically drop important protections. Most states still require liability coverage regardless of your car’s age. And if you depend on your vehicle daily and would struggle to pay for major repairs or replacement after an accident, collision and comprehensive coverage can still be extremely valuable.

Myth #4: “My homeowners policy covers all my belongings.”

The truth: Homeowners insurance includes personal property coverage, but the limits may not fully protect high-value items. Things like fine jewelry, rare collections, or premium electronics often have lower coverage caps. To properly insure these items, you may need to list them individually under separate endorsements or additional policies.

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

The truth: Coverage isn’t guaranteed for every person who gets behind your wheel. Most policies do extend to occasional drivers who have your permission, but there are clear restrictions—especially for people using your car for business, delivery services, or rideshare work. If someone else regularly drives your vehicle or uses it professionally, you should confirm they’re protected under your policy.

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

The truth: A robust savings account is great, but it may not come close to covering large-scale losses. Homeowners insurance doesn’t just protect the structure—it also covers liability claims, additional living expenses if you can’t stay in your home, and personal property. Considering the average rebuild cost now exceeds $320,000, opting out of coverage could leave you facing a financial disaster.

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

The truth: Personal auto policies often extend to rental cars, but usually only when the rental is for personal use. Business rentals or commercial purposes are typically not included. Before turning down the insurance offered at the rental counter, double-check your policy to avoid surprises.

Myth #8: “My credit score has no effect on my insurance rate.”

The truth: Many states permit insurers to use a credit-based insurance score when determining premiums. This isn’t about borrowing money—industry data shows a correlation between credit behavior and overall risk. If your credit has improved recently, it’s worth asking your agent whether you qualify for lower premiums.

Quick Ways to Avoid Insurance Gaps

Staying proactive with your insurance is one of the best ways to ensure you’re covered when life throws the unexpected your way. Here are some helpful habits to adopt:

• Review your policy once a year, especially after major life events.
• Ask your agent to clarify exclusions—knowing what’s not covered is just as important as knowing what is.
• Document your belongings and vehicle details to make future claims smoother.
• Understand the difference between “replacement cost” and “actual cash value,” since they determine how much you receive after a loss.
• Reflect on whether you’d be financially secure if you needed to file a claim tomorrow.

When to Revisit Your Insurance Coverage

Life doesn’t stand still, and your insurance shouldn’t either. Consider reviewing your policies any time you experience changes such as:

• Buying or selling a home or vehicle
• Completing renovations or major improvements
• Getting married, divorced, or welcoming a child
• Adding a new driver to the household (especially teens!)
• Launching a business or side gig
• Seeing shifts in your income, credit score, or financial goals

Whether you’ve trusted one of these myths or simply want to make sure your coverage still works for you, now is an ideal moment to take a fresh look at your policies. We’re here to help you understand your options and avoid hidden gaps that could cost you later. Reach out anytime to schedule a quick, no-pressure review of your coverage.