With Debunking Day coming up on March 11th, it’s the perfect moment to clear up some long-standing confusion around home and auto insurance. Many people still rely on assumptions or outdated advice when evaluating their coverage, and unfortunately, those misconceptions can lead to costly surprises when something unexpected happens.
Below, we’ll walk through eight widespread insurance myths and share what’s actually true so you can make informed, confident decisions about your protection.
Myth #1: “Red cars cost more to insure.”
The truth:
The color of your car has absolutely no impact on your premium. Insurers care about details like your vehicle’s make, model, age, safety features, how frequently you drive, and your driving record. Whether your car is red, blue, or lime green, the paint color won’t change your rate.
Myth #2: “Flood insurance is only for people in high-risk flood zones.”
The truth:
Flooding can happen almost anywhere, not just in designated flood zones. Roughly one-quarter of all flood insurance claims come from areas considered lower risk. Even more important, standard homeowners policies typically do not cover flooding. If your area gets rain—as most do—it’s worth exploring flood insurance.
Myth #3: “Older cars don’t need full coverage.”
The truth:
While older vehicles do decline in value, liability coverage is still required in most states regardless of age. And if you depend on your car daily, the potential out-of-pocket cost of repairs or replacement after an accident might justify keeping collision and comprehensive coverage.
Myth #4: “My homeowners policy protects everything I own.”
The truth:
Homeowners insurance provides personal property coverage, but the limits are tied to a percentage of your home’s insured value. High-end items—such as fine jewelry, collectibles, or specialty electronics—may exceed those limits. To fully insure these valuables, you may need to add separate scheduled coverage or endorsements.
Myth #5: “Anyone who drives my car is covered.”
The truth:
Permission alone doesn’t guarantee full protection. Many policies extend coverage to occasional drivers, but restrictions apply—especially if the vehicle is being used for business purposes, deliveries, or rideshare activities. If someone uses your car regularly or for work, you’ll need to confirm they’re properly covered.
Myth #6: “Good savings mean I don’t need homeowners insurance.”
The truth:
Even a strong savings cushion may not be enough to handle the financial fallout of a major loss. Homeowners insurance covers more than the structure itself. It also includes liability coverage if someone is injured on your property, loss-of-use benefits if your home becomes uninhabitable, and protection for your belongings. Given that the average cost to rebuild a home now exceeds $320,000, skipping coverage is a significant risk.
Myth #7: “My auto insurance automatically covers rental cars.”
The truth:
Many personal auto policies cover rental cars, but usually only for personal use. If the rental is connected to business travel or commercial activity, your personal policy may not apply. Always review your coverage before declining the rental company’s insurance.
Myth #8: “My credit score doesn’t affect my insurance rates.”
The truth:
In many states, insurers use a credit-based insurance score when determining premiums. This is because credit patterns can statistically correlate with risk. If your credit has improved, it’s worth checking in with your agent—you may qualify for better rates.
Pro Tips to Prevent Costly Coverage Gaps
Staying ahead of your insurance needs can make all the difference. Here are a few simple ways to ensure you’re properly protected:
- Review your policies every year—especially after major life or property changes.
- Ask your agent about exclusions so you understand what isn’t covered.
- Keep a home inventory or photos of your possessions to streamline future claims.
- Learn the difference between “replacement cost” and “actual cash value,” as it impacts your potential payout.
It can help to pause and ask yourself: “If I needed to file a claim tomorrow, would I be financially prepared?”
When You Should Revisit Your Policies
Your life evolves—and your insurance should adjust along with it. Consider reviewing your coverage whenever the following changes occur:
- You purchase or sell a home or vehicle
- You complete major upgrades or renovations
- Your family structure changes such as marriage, divorce, or having a child
- A new driver joins your household (especially teen drivers!)
- You launch a business or take on a side gig
- Your finances, income, or credit score shifts significantly
Whether you’ve held onto one of these myths or simply want to ensure your policies still match your needs, now is a great time to take a fresh look at your coverage. We’re here to help you make informed choices and avoid unexpected gaps. Reach out anytime to schedule a quick, no-pressure policy review.
