8 Common Insurance Myths That Could Leave You Exposed

With Debunking Day landing on March 11th, there’s no better moment to clear up some of the biggest misconceptions surrounding home and auto insurance. Many people make decisions based on assumptions or outdated advice, and unfortunately, those misunderstandings can lead to costly surprises when it’s time to file a claim.

To help you stay protected, we’re breaking down eight widespread insurance myths—and what you should actually believe instead.

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

The truth: The color of your vehicle has absolutely no impact on your insurance premiums. Insurers focus on details that influence risk—things like your car’s make and model, safety features, age, mileage, and how you drive. Your driving record also plays a major role. But the color? It doesn’t factor in at all.

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

The truth: Floods don’t limit themselves to high-risk areas. In fact, about a quarter of flood-related insurance claims come from homes located outside designated flood zones. Even more surprising—standard homeowners policies rarely include flood coverage. If your area gets rainfall, it’s worth evaluating whether flood insurance belongs in your protection plan.

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

The truth: While older vehicles may not hold the same market value as newer ones, that doesn’t mean you can skip important protections. Most states still require liability coverage, regardless of the vehicle’s age. And if you rely on your car daily or don’t have the financial cushion to cover major repairs after an accident, maintaining collision or comprehensive coverage might still be a smart choice.

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

The truth: Homeowners insurance does cover personal belongings, but the coverage typically stops at a certain percentage of your home’s insured value. High-value items—such as fine jewelry, rare collectibles, or expensive tech—often exceed these limits. To make sure those special items are fully protected, you may need to individually insure them through itemized endorsements or separate policies.

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

The truth: Your policy may extend coverage to someone who occasionally borrows your car with your permission, but it’s not always guaranteed. Business use, delivery driving, and rideshare activities often fall outside standard coverage. And if someone uses your vehicle regularly, they may need to be officially added to your policy. When in doubt, confirm with your insurer so there are no surprises later.

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

The truth: Even significant savings may not be enough to financially recover from a major loss. Homeowners insurance protects far more than the physical structure—it also covers your personal property, provides liability protection if someone is injured on your property, and pays for temporary living expenses if your home becomes uninhabitable. With the average cost to rebuild a home now exceeding $320,000, choosing to go without coverage is a major gamble.

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

The truth: Many personal auto policies do cover rental vehicles—but generally only when they’re used for personal travel. Rentals used for business purposes or commercial activities may not be covered. Before you decline the rental company’s insurance, it’s smart to verify what your personal policy actually includes.

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

The truth: In many states, your premium may be influenced by a credit-based insurance score. Insurance companies use this information because there’s data showing a correlation between credit habits and claim likelihood. If your credit has improved recently, it may be worth checking in with your agent to see whether you qualify for better rates.

Quick Ways to Prevent Coverage Gaps

Staying proactive about your insurance can help you avoid stressful and expensive surprises. Here are a few habits to strengthen your coverage:

• Review your policy each year—especially after major life changes.
• Ask your agent to explain exclusions so you’re clear on what’s not covered.
• Maintain an updated inventory of your belongings, including photos and values, to streamline future claims.
• Understand how “replacement cost” differs from “actual cash value,” since this affects your payout after a loss.
• Consider whether you’d be financially prepared if you had to file a claim tomorrow.

When to Revisit Your Insurance Coverage

Life changes quickly, and your insurance should change with it. Plan to reassess your policies when:

• You buy or sell a home or vehicle
• You renovate or complete major upgrades
• You get married, divorced, or welcome a child
• A new driver joins your household (especially teenagers!)
• You launch a business or start a side hustle
• Your income, credit score, or overall financial situation shifts

Whether you’ve believed one of these myths or simply want to double-check that your coverage still aligns with your needs, now is a great time to take a closer look. Understanding your policies is one of the best ways to protect yourself from unexpected losses.

We’re here to support you in making confident, informed insurance decisions. Reach out anytime to schedule a quick, pressure-free policy review—we’re always happy to help.