8 Common Insurance Myths That Could Leave You Unprotected

Chelsea Santone

Mar 12 2026 15:00

March 11th marks Debunking Day, making it the perfect moment to clear up some long-standing misunderstandings about home and auto insurance. Many people rely on assumptions or outdated information when choosing their coverage, and unfortunately, those misconceptions can lead to expensive surprises when something goes wrong. To help you stay informed and better protected, here’s a fresh look at eight widespread insurance myths—and the real facts you should know. Myth #1: “Red cars cost more to insure.” The truth: The color of your vehicle has zero impact on your insurance premium. Insurers never consider paint color when determining your rate. Instead, they focus on details like your car’s make and model, age, engine size, safety features, driving habits, and your personal driving history. Whether your car is red, silver, blue, or anything in between, the color won’t change your premium. Myth #2: “Flood insurance is only necessary in flood zones.” The truth: Flooding isn’t limited to high-risk areas. Around one-quarter of flood insurance claims actually come from properties located outside designated flood zones. Even more surprising? Most standard homeowners policies do not include flood protection at all. If your home is in an area where it rains—which covers almost everyone—it’s worth evaluating whether flood insurance makes sense for you. Myth #3: “Older cars don’t need full coverage.” The truth: While aging vehicles do lose value over time, that doesn’t automatically mean you should drop important coverage. Nearly every state still requires liability insurance to stay road-legal. Beyond that, comprehensive and collision coverage may still be worthwhile if you depend on your car daily or would struggle to pay for major repairs or a replacement out of pocket after an accident. Myth #4: “My homeowners policy covers everything I own.” The truth: Homeowners insurance does protect your personal belongings, but only up to certain limits. High-value items such as jewelry, rare collectibles, and premium electronics often exceed standard coverage caps. To make sure those items are fully protected, you may need to add scheduled coverage or additional endorsements specifically tailored to their value. Myth #5: “Anyone driving my car is automatically covered.” The truth: Insurance coverage doesn’t apply to every driver in every situation. While most policies extend coverage to occasional drivers with your permission, there are restrictions. Coverage can get complicated if the car is used for business purposes, delivery work, or rideshare driving. If someone regularly uses your vehicle—or uses it for work—you’ll want to confirm ahead of time that your policy fully protects them. Myth #6: “Good savings mean I don’t need homeowners insurance.” The truth: Even a strong savings account may not be able to cover the financial hit from a major loss. Homeowners insurance includes far more than protection for the structure itself. It also provides liability coverage if someone is injured on your property, compensation for personal belongings, and loss-of-use coverage if your home becomes temporarily uninhabitable. With the average rebuild cost now exceeding $320,000, skipping coverage can be an enormous gamble. Myth #7: “My auto insurance automatically covers rental cars.” The truth: Many auto policies do extend to rental vehicles, but typically only when used for personal travel. Business rentals or vehicles used for commercial purposes often fall outside your personal policy’s protection. Before declining the rental company’s insurance, it’s best to verify where your existing coverage begins and ends. 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 what you’ll pay. This isn’t the same as a traditional credit score, but it often correlates with risk assessment used by insurance companies. If your credit has recently improved, it may be worth reaching out to your agent—your premium could benefit from the update. Quick Tips to Prevent Coverage Gaps Being proactive can go a long way toward avoiding unpleasant surprises. A few smart habits include: • Reviewing your policy each year, especially after major life or property changes. • Asking your agent for clarification on exclusions so you understand what isn’t covered. • Creating a home or vehicle inventory with photos and values to simplify any future claims. • Learning the difference between “replacement cost” and “actual cash value,” as these determine your compensation after a loss. • Considering whether you could comfortably manage the cost of filing a claim tomorrow. When to Revisit Your Insurance Policy Life evolves quickly, and your insurance should evolve with it. It’s a good idea to reassess your coverage when: • You buy or sell a home or a vehicle • You complete major renovations or upgrades • You get married, divorced, or welcome a child • A teenage or additional driver joins the household • You launch a business or side gig • Your financial situation, income, or credit score changes Whether you’ve held onto one of these myths or simply want to be sure your insurance still fits your needs, now is an ideal time to take a closer look. We’re here to help you understand your options and make confident decisions about your protection. Reach out anytime to schedule a friendly, no-pressure review of your policy.