Debunking 8 Common Insurance Myths That Could Leave You Exposed

With Debunking Day right around the corner on March 11th, there’s no better time to clear up some of the most persistent misunderstandings about home and auto insurance. Many people rely on assumptions or outdated information when choosing coverage, which can lead to costly surprises when they need protection the most.

To help you stay better informed, we’re breaking down eight stubborn insurance myths—and what the facts really show.

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

The truth: The color of your car has zero influence on your insurance premium. Red, blue, black, white—it doesn’t matter. Insurers focus on factors like your vehicle’s age, model, engine type, safety ratings, how often you drive, where you drive, and your personal driving record. Paint color never plays a role in determining your premium.

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

The truth: Flooding isn’t exclusive to high‑risk areas. In fact, about one‑quarter of flood insurance claims come from homes located outside designated flood zones. Even more important, most standard homeowners insurance policies don’t include flood coverage at all. If your area gets rain—which is pretty much everywhere—it’s worth considering a flood policy.

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

The truth: While older cars often have lower market values, that doesn’t automatically mean you should drop important coverages. Most states still require liability insurance regardless of how old your car is. And if you depend on your vehicle and couldn’t afford major repairs or replacement, collision and comprehensive coverage may still offer essential financial protection.

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

The truth: Homeowners insurance does protect your personal property—but only up to certain limits. High‑value items like jewelry, collectibles, artwork, or premium electronics can easily exceed standard coverage caps. To fully insure those valuables, you may need to “schedule” them with special endorsements or purchase separate policies.

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

The truth: Coverage for other drivers isn’t always guaranteed. Many policies may extend protection to someone who occasionally borrows your vehicle with your permission. However, that extension usually doesn’t apply to people using your car for business reasons—such as delivery work or ridesharing—or those who use your vehicle regularly. It’s always worth confirming who is and isn’t covered before handing over your keys.

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

The truth: Even a substantial emergency fund may not be enough to recover from a catastrophic loss. Homeowners insurance covers far more than the structure of your home. It includes liability coverage if someone is hurt on your property, loss‑of‑use benefits if your home becomes uninhabitable, and protection for your belongings. With the average cost to rebuild a home now exceeding $320,000, going without insurance could put you at significant financial risk.

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

The truth: Many personal auto policies do include rental coverage—but typically only when the rental is for personal use. If you’re renting a vehicle for business travel or any commercial activity, your personal policy may not apply. Before declining the rental agency’s insurance, double‑check what your policy actually covers.

Myth #8: “My credit score doesn’t affect my insurance rates.”

The truth: In many states, insurers use a credit‑based insurance score to help determine rates. This is because certain credit patterns have been shown to correlate with risk levels. If you’ve recently improved your credit, it could be worth reaching out to your agent—your premium might be eligible for a review.

Quick Tips to Prevent Coverage Gaps

Being proactive about your insurance can help you avoid major financial stress later. A few smart habits include:

• Reviewing your policies each year, especially after major life or property changes.
• Talking with your agent about exclusions—knowing what isn’t covered is just as important as understanding what is.
• Keeping an updated inventory of your belongings or photos of your vehicle to simplify the claims process.
• Learning the difference between “replacement cost” and “actual cash value,” since each affects claim payouts differently.

It’s worth asking yourself: If you had to file a claim tomorrow, would you be financially prepared?

When to Revisit Your Insurance Coverage

Life changes quickly, and your insurance should keep up with those shifts. Consider reviewing your policies when:

• You buy or sell a home or vehicle
• You complete a remodel or major home upgrade
• You get married, divorced, or welcome a child
• Someone new starts driving in your household (especially teens!)
• You launch a business or take on a side gig
• Your income, credit score, or financial situation changes significantly

Whether you’ve held on to one of these myths or you just want to be certain your coverage still fits your life, now is a great time to reassess. We’re here to help you stay informed, confident, and protected. Reach out anytime for a simple, no‑pressure policy review.