8 Common Insurance Myths That Could Leave You Exposed

With Debunking Day coming up on March 11th, it’s the perfect moment to take a closer look at some long-standing misunderstandings surrounding home and auto insurance. Many people make decisions based on information that’s outdated, incomplete, or simply untrue—and when a loss happens, those misconceptions can turn into expensive mistakes.

To help you stay protected, here’s a clear breakdown of eight insurance myths that continue to circulate, along with the real facts you should trust instead.

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

The truth: Your car’s paint color has absolutely no effect on your insurance rate. Whether your vehicle is red, silver, black, or neon green, insurers don’t consider color when calculating premiums. What actually matters are elements like the vehicle’s make and model, its age, engine size, safety ratings, and how—and how often—you drive. Your driving record also plays a major role. Color never enters the equation.

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

The truth: Flooding can happen almost anywhere. Roughly one-quarter of flood insurance claims come from properties outside of designated flood zones. Even more important to know: standard homeowners insurance typically doesn’t include flood coverage. If you live in an area where it rains—which is nearly everywhere—it may be worth exploring a flood policy to avoid major out-of-pocket losses.

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

The truth: While older vehicles do lose value over time, that doesn’t automatically mean you should drop key protections. Liability coverage is required in most states regardless of your car’s age. And if you rely on your vehicle daily or wouldn’t be able to cover a major repair or total loss after an accident, maintaining collision or comprehensive coverage might still be the smartest move.

Myth #4: “My homeowners insurance covers every possession I own.”

The truth: Homeowners policies include personal property protection, but the limit is usually tied to a percentage of your total home coverage. If you own high-value items—such as jewelry, collectibles, art, or specialty electronics—they may exceed those built-in limits. To fully safeguard these belongings, you may need to purchase individual endorsements or separate policies to ensure they’re properly covered.

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

The truth: Coverage doesn’t extend to just anyone who gets behind your wheel. Policies often protect occasional drivers who have your permission, but things get complicated when it comes to business use, delivery work, or rideshare driving. If someone else uses your car regularly or for professional purposes, you should verify whether your policy covers them—or if you need to make adjustments.

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

The truth: Even a sizable emergency fund may not be enough to recover after a major loss. Homeowners insurance doesn’t just protect the structure of your home—it also provides liability coverage if someone is injured on your property, helps pay for living expenses if your home becomes uninhabitable, and covers your belongings. With the cost to rebuild a home averaging more than $320,000, skipping insurance puts your finances at significant risk.

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

The truth: Many personal auto policies do extend coverage to rental vehicles—but typically only for personal use. If your rental is connected to business travel or commercial activity, your policy may not apply. Before declining rental insurance, it’s always wise to double-check how your existing coverage works.

Myth #8: “My credit has nothing to do with my insurance premium.”

The truth: In many states, insurance companies use a credit-based insurance score when determining your rate. These scores help insurers assess risk based on statistical trends. If your credit has improved, it may be worth reaching out to your agent—your premium could improve right along with it.

Quick Tips to Reduce Your Insurance Risks

Staying ahead of potential gaps in your coverage can make a world of difference. Here are some smart habits to help you stay protected and prepared:

• Review your policy each year, especially if you’ve experienced a major life change.
• Ask your agent to explain any exclusions so you understand what isn’t covered.
• Create an inventory of your belongings—or keep updated photos and values—to streamline claims.
• Know the difference between “replacement cost” and “actual cash value,” as it can affect your payout.

As you look at your coverage, ask yourself: “If I needed to file a claim tomorrow, would I be financially protected?”

When It’s Time to Revisit Your Policy

Your life—and your insurance needs—can change quickly. Here are a few moments when it makes sense to review your coverage:

• Buying or selling a home or car
• Completing major upgrades or renovations
• Life changes such as marriage, divorce, or welcoming a child
• A teen or new driver joining your household
• Starting a business or side gig
• Significant shifts in income or credit

Whether you’ve believed one of these myths or just want to be sure your policies still align with your needs, now is a great time to take another look. We’re here to help you make confident, informed decisions and avoid unexpected gaps in coverage. Reach out anytime to schedule a simple, no-pressure policy review.