8 Common Insurance Myths That Could Leave You Vulnerable

March 11th is Debunking Day—a perfect opportunity to clear up some long-standing myths about home and auto insurance. Plenty of people rely on assumptions or outdated information when choosing their coverage, and unfortunately, those misunderstandings can lead to unexpected and costly gaps when they need support the most.

Below, we take a closer look at eight widespread insurance myths and what you should actually know instead.

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

The truth: Your vehicle’s paint color has no influence on your auto insurance rates. Insurers focus on details like the make and model of your car, its age, safety features, mileage, where it’s driven, and your personal driving record. Whether your car is red, blue, white, or neon green, the color won’t raise—or lower—your premium.

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

The truth: Flood damage isn’t limited to high‑risk areas. In fact, roughly a quarter of flood insurance claims come from homes outside designated flood zones. What surprises many homeowners is that most standard policies do not include flood protection. If your area gets rain—which is almost everywhere—it’s worth looking into a separate flood policy.

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

The truth: While older cars typically have lower market value, that doesn’t mean they don’t need protection. Most states still require liability coverage regardless of a vehicle’s age. And if you depend on your car daily, the cost of repairs or replacement after an accident could be more than you can comfortably afford. In those cases, keeping collision or comprehensive coverage may still be a smart choice.

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

The truth: Homeowners insurance does include personal property coverage, but that coverage usually only applies up to a certain percentage of your home’s insured value. High‑value belongings—such as jewelry, rare collectibles, or premium electronics—may exceed those limits. To fully protect items like these, you may need dedicated endorsements or separate scheduled coverage.

Myth #5: “All drivers are covered when using my car.”

The truth: Coverage isn’t guaranteed for everyone who gets behind your wheel. Insurance may extend to occasional drivers with your permission, but there are notable exceptions. Business use, delivery services, and ridesharing often fall outside a personal policy’s limits. And if someone uses your car regularly, you’ll need to make sure they’re properly included in your policy.

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

The truth: Even a robust savings account might not be enough to cover a major loss. Homeowners insurance protects far more than your physical home—it also includes liability coverage, loss of use if you’re forced to live elsewhere during repairs, and protection for personal belongings. With the average rebuild cost exceeding $320,000, opting out of coverage can be a dangerous gamble.

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

The truth: Your personal auto insurance often covers rental cars, but typically only for personal travel. Rentals used for business or commercial activity usually fall outside your policy’s scope. Before you decline optional rental coverage, take a moment to verify whether your personal policy actually applies to the trip.

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

The truth: In many states, insurers do factor a credit‑based score into premium calculations. Studies have shown a correlation between credit behavior and risk levels, which is why insurers sometimes use it as part of their pricing models. If your credit has improved recently, it may be worth checking in with your agent to see if you’re eligible for a lower rate.

Quick Tips to Prevent Coverage Gaps

Staying informed about your insurance can help you avoid unexpected surprises. Consider these smart habits:

• Review your policies annually, especially after major changes in your life.
• Ask your agent about what isn’t covered—exclusions can be just as important as what’s included.
• Keep a home inventory or detailed photos of your belongings to streamline potential claims.
• Learn the difference between “replacement cost” and “actual cash value,” as these terms affect your payout after a loss.
• Take time to consider whether you’d be financially prepared if you had to file a claim tomorrow.

When to Update Your Insurance Coverage

Your life evolves—and your insurance should evolve with it. It’s a good idea to review your coverage when:

• You buy or sell a home or a vehicle.
• You complete a renovation or major home improvement project.
• Your family structure changes, such as marriage, divorce, or the arrival of a child.
• A new driver joins your household—especially a teen.
• You begin a side business or new entrepreneurial venture.
• Your financial situation, credit score, or income shifts significantly.

Whether you’ve believed one of these myths or simply want to make sure your protection fits your current needs, now is a great moment to take a closer look. We’re here to help you make confident, informed decisions so you can avoid costly gaps in coverage.

Reach out anytime to schedule a simple, no‑pressure policy review.