8 Common Insurance Myths That Could Leave You Exposed

With Debunking Day coming up on March 11, there’s no better opportunity to clear up the confusion surrounding some of the biggest misconceptions in home and auto insurance. Many people make coverage decisions based on assumptions, outdated information, or advice that isn’t quite accurate. Unfortunately, those misunderstandings can lead to costly gaps when it really counts.

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

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

The reality: The color of your vehicle doesn’t play any role in determining your auto insurance rate. Whether your car is red, blue, black, or neon green, insurers don’t factor color into premiums. Instead, they look at details like the age and make of your car, its safety features, your driving history, how often it’s driven, and where it’s typically kept. Color never enters the equation.

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

The reality: Flooding can occur almost anywhere—it isn’t limited to areas marked as high risk. Roughly a quarter of flood claims come from properties outside designated flood zones. Even more important, most standard homeowners policies do not cover flood damage. If heavy rain is possible where you live (which applies to most places), flood insurance is worth considering to avoid major financial loss.

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

The reality: While older vehicles typically have a lower market value, that doesn’t automatically mean you should drop important protections. Liability coverage is still required in most states regardless of the car’s age. And if repairs or replacement after a collision would strain your budget, maintaining collision and comprehensive coverage may still be a smart decision.

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

The reality: Homeowners insurance does protect your belongings, but only up to the policy’s coverage limits—which are often capped at a set percentage of your home’s insured value. High-value items such as jewelry, collectibles, designer accessories, or specialty electronics may exceed those limits. To safeguard these valuables, you may need to add separate endorsements or schedule items individually.

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

The reality: Permission alone doesn’t guarantee full coverage. While occasional, personal-use drivers may be covered under your policy, there are exceptions. Business-related driving, food delivery, and ridesharing usually require additional or different coverage. If someone frequently uses your car or drives it for work, it’s crucial to confirm they’re properly insured.

Myth #6: “Savings can replace homeowners insurance.”

The reality: Even a solid financial cushion may not be enough to recover from a major loss. Homeowners insurance includes far more than protection for the structure itself. It also covers liability if someone gets hurt on your property, living expenses if your home becomes uninhabitable, and damage or loss of your belongings. With the average rebuilding cost now exceeding $320,000, going without insurance creates substantial risk.

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

The reality: Many personal auto policies extend to rental vehicles—but usually only when the rental is for personal use. Business-related rentals or commercial use typically fall outside standard coverage. Before turning down the rental company’s insurance at the counter, double-check the terms of your policy.

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

The reality: In many states, insurers use credit-based insurance scores when determining premiums. These scores aren’t the same as your traditional credit score, but they often correlate with risk, based on statistical trends. If your credit has improved recently, it may be worth discussing with your agent—you could qualify for a more favorable rate.

Smart Ways to Prevent Coverage Gaps

Being intentional about your insurance decisions can save you from unexpected financial strain later. A few proactive steps can make a big difference:

• Review your policy each year, especially after major life or household changes.
• Ask your agent about exclusions—understanding what isn’t covered is just as important as knowing what is.
• Create an inventory of your belongings, including photos and estimated values, to simplify future claims.
• Learn the difference between “replacement cost” and “actual cash value,” as this can significantly affect your payout after a loss.

It’s also helpful to ask yourself one simple question: Would I be financially prepared if I had to file a claim tomorrow?

When It’s Time to Revisit Your Insurance Coverage

Your life doesn’t stay the same—and your insurance shouldn’t either. It may be time to review your policies if:

• You purchase or sell a home or vehicle
• You complete a renovation or major home upgrade
• You get married, divorced, or welcome a child
• A new driver joins your household (teen drivers included!)
• You launch a business or start a side hustle
• Your financial situation, income, or credit score changes

Whether you’ve believed one of these myths or simply want to ensure your coverage still aligns with your needs, now is a great time to review your policies. We’re here to help you make confident, informed decisions and avoid the stress of unexpected gaps. Reach out today to schedule a quick, no-pressure policy review.