8 Common Insurance Myths That Could Leave You Exposed

With Debunking Day coming up on March 11th, there’s no better moment to tackle some of the most widespread misunderstandings about home and auto insurance. Many people base decisions on assumptions that simply aren’t accurate anymore, and those misconceptions can create major financial problems when the unexpected happens.

To help clear things up, here’s a fresh look at eight stubborn insurance myths and what you should know instead.

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

The truth: The color of your vehicle—red, blue, or otherwise—has no bearing on your insurance rate. What insurers actually evaluate includes the vehicle’s make, model, age, safety features, engine type, and the way you use it. Your driving record also plays a big role. Paint color doesn’t factor in at all.

Myth #2: “Flood insurance is only for people in flood zones.”

The truth: Flooding isn’t limited to officially designated high-risk zones. Surprisingly, about 25% of flood claims come from areas outside those boundaries. Even more important to know: standard homeowners policies typically do not include flood coverage. If your area gets rain—which is nearly everywhere—exploring flood insurance is a smart precaution.

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

The truth: While an aging car may be worth less than a newer model, that doesn’t automatically mean you should scale back your insurance. Most states still require liability coverage regardless of a vehicle’s age. And if you depend on your car for daily life and couldn’t easily cover significant repairs or a replacement, collision and comprehensive coverage may still be worthwhile.

Myth #4: “My homeowners policy protects every valuable I own.”

The truth: Homeowners insurance includes personal property protection, but there are limits—typically tied to a percentage of your home’s insured value. High-value items like fine jewelry, collectibles, or top-of-the-line tech can exceed these limits. To ensure full protection, you may need to list these items individually and add extra coverage.

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

The truth: Coverage isn’t universal for anyone behind your wheel. While your policy might extend protection to someone who drives with your permission, exceptions exist—especially for business-related activities such as delivering goods or driving for rideshare platforms. If someone uses your vehicle often or for work, it’s essential to verify that your policy fully covers them.

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

The truth: Even if you’ve built a solid financial cushion, it may not be enough to handle a major disaster. Homeowners insurance covers far more than your house—it also includes liability protection, coverage for personal items, and assistance with temporary living expenses if your home becomes uninhabitable. With the average rebuild cost now exceeding $320,000, skipping insurance can create a major financial burden.

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

The truth: Many policies do extend coverage to rental vehicles, but only for personal use. If you’re renting a car for work or a business trip, your personal auto policy may not apply. Before turning down the rental company’s add-on coverage, it’s wise to confirm what your policy includes.

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 premiums because certain credit patterns can correlate with risk. If your credit score has improved recently, it’s worth checking with your agent—you may qualify for a better rate.

Simple Ways to Avoid Coverage Gaps

Staying informed and proactive can help you avoid unwelcome surprises at claim time. Here are practical steps to keep your protection up to date:

• Review your insurance policy every year, especially after major life or property changes.
• Ask your agent about policy exclusions—knowing what isn’t covered is just as important as what is.
• Create a home or vehicle inventory with photos and item details to streamline future claims.
• Learn the difference between replacement cost and actual cash value—your payout can vary significantly.

It’s always worth asking yourself: “Would I be financially prepared if I had to file a claim tomorrow?”

Key Times to Reevaluate Your Insurance

Life moves quickly, and your coverage should reflect those changes. It’s a good idea to revisit your policies whenever:

• You buy or sell a vehicle or home
• You complete a renovation or make significant upgrades
• Your family structure changes through marriage, divorce, or the arrival of a child
• A new driver joins your household (especially a teenager)
• You begin a business or side hustle from home
• Your financial situation—including credit score or income—shifts

Whether you previously believed one of these myths or simply want to confirm your coverage is still the right fit, now is an excellent time to take a closer look. We’re here to help you make confident, informed decisions and keep your protection aligned with your needs. Reach out anytime to schedule a quick, no-pressure review of your policies.