With Debunking Day coming up on March 11th, it’s the perfect opportunity to clear up some of the biggest misunderstandings about home and auto insurance. Many people base their coverage decisions on outdated assumptions or half-true information, which can lead to unexpected financial trouble when a claim arises.
To help you stay protected, we’re breaking down eight widespread insurance myths—and revealing what’s actually true.
Myth #1: “Red cars cost more to insure.”
The reality:
Your car’s paint color has absolutely no impact on your insurance premium. Insurers focus on factors that influence risk, such as the vehicle’s age, make and model, engine size, safety ratings, where you live, how often you drive, and your driving history. Whether your car is red, blue, or lime green, color is never part of the pricing equation.
Myth #2: “Flood insurance is only for people in high-risk zones.”
The reality:
Flooding isn’t limited to coastal areas or flood-prone regions. In fact, roughly a quarter of all flood insurance claims originate outside high-risk flood zones. What’s more, most standard homeowners policies do not
include flood coverage. If your area gets rain—which is nearly everywhere—flood insurance may be worth exploring.
Myth #3: “Older cars don’t need full coverage.”
The reality:
While older vehicles do decline in value, that doesn’t mean you should automatically drop important protections. Almost every state still requires liability coverage, regardless of what you drive. And if you depend on your car and couldn’t afford major repairs or replacement out of pocket, keeping collision and comprehensive coverage might still be the smartest choice.
Myth #4: “My homeowners insurance covers everything I own.”
The reality:
Homeowners insurance does include personal property coverage, but it typically has limits based on a percentage of your insured property value. High-value items—like jewelry, antiques, artwork, or premium electronics—can easily exceed these caps. To fully protect them, you may need to “schedule” these belongings individually or add specific endorsements.
Myth #5: “Anyone who drives my car has automatic coverage.”
The reality:
Coverage for other drivers isn’t guaranteed in every circumstance. While many standard auto policies extend temporary coverage to someone who occasionally borrows your car with permission, there are important exceptions. Business use, delivery driving, and rideshare activities often require special coverage. If someone frequently drives your vehicle, it’s essential to verify they’re properly listed on your policy.
Myth #6: “A strong savings account means I can skip homeowners insurance.”
The reality:
Even a large emergency fund may not be enough to absorb the financial hit from a major loss. Homeowners insurance does far more than protect the physical structure of your home. It can cover personal belongings, provide liability protection if someone is injured on your property, and help pay for temporary housing if your home becomes uninhabitable. Given that the average rebuild cost now exceeds $320,000, going without coverage is a significant gamble.
Myth #7: “Rental cars are automatically covered by my car insurance.”
The reality:
While many personal auto policies do extend coverage to rental vehicles, this usually applies only to personal-use rentals. If you’ll be driving the rental for business or commercial activities, your personal policy likely won’t apply. It’s always best to verify your coverage before declining the rental company’s insurance.
Myth #8: “My credit score has no connection to my insurance rates.”
The reality:
Many states allow insurers to use a credit-based insurance score when calculating premiums. The reason comes down to statistical trends—certain credit patterns correlate with claim likelihood. If your credit has improved recently, it may be worth contacting your agent to see if you qualify for a better rate.
Helpful Tips to Prevent Coverage Gaps
Taking a few proactive steps now can save you from major stress and unexpected costs down the road. Consider the following:
- Review your insurance policy once a year, especially after big milestones or life changes.
- Ask your agent about exclusions so you know exactly what isn’t covered.
- Keep an updated inventory of your belongings, including photos and approximate values, to simplify future claims.
- Learn the difference between “replacement cost” and “actual cash value,” as this affects how much you’d receive after a loss.
- Regularly evaluate whether you’d be financially able to handle a claim if something happened tomorrow.
When to Revisit Your Policy
Your coverage should evolve as your circumstances change. Make it a habit to review your insurance whenever any of the following occur:
- You buy or sell a home or vehicle
- You complete a renovation or significant home improvement
- You experience a major life change—marriage, divorce, or welcoming a child
- A new driver joins the household (especially teens!)
- You launch a business or side gig
- Your financial situation, income, or credit score changes
Whether you’ve believed some of these myths in the past or simply want reassurance that your policy is still the right fit, now is a great time to take a fresh look at your coverage.
We’re here to help you understand your options, avoid coverage gaps, and feel confident about your protection. Reach out anytime to schedule a quick, no-pressure policy review.
