8 Common Insurance Myths That Could Leave You At Risk

March 11th is Debunking Day, making it the perfect opportunity to clear up some long-standing misunderstandings about home and auto insurance. Many people make decisions based on outdated information or assumptions, and those misconceptions can turn into costly surprises when it’s time to file a claim. Taking a closer look at what’s fact versus fiction can help ensure you’re better protected.

Below, we break down eight widespread insurance myths and what you should know instead.

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

Let’s set this one straight—your car’s color has nothing to do with your insurance rate. Whether your vehicle is red, blue, black, or neon green, insurers don’t consider color in their pricing. Instead, they look at characteristics like the vehicle’s age, model, engine type, safety features, and how and where it’s driven. Your driving history also plays a major role. But paint color? It never enters the equation.

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

Even if you’re not in a designated high-risk area, flooding can still happen. Roughly one-quarter of all flood insurance claims originate from outside these zones. What’s more, standard homeowners policies typically exclude flood damage. If there’s any chance heavy rain could impact your property, it’s worth considering a separate flood insurance policy.

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

Although older vehicles usually depreciate in value, that doesn’t automatically mean you should forgo coverage beyond liability. Most states still require liability insurance regardless of the car’s age. And if you rely on your vehicle to get to work, school, or daily errands, repairing or replacing it after an accident could still be an unexpected financial strain. Collision and comprehensive coverage may remain worthwhile depending on how much you depend on your car.

Myth #4: “My homeowners policy covers every single thing I own.”

Homeowners insurance does include personal property protection, but those limits are often tied to a percentage of the insured value of your home. Items like fine jewelry, rare collectibles, designer accessories, or high-end tech can easily exceed standard policy caps. To ensure full protection, you may want to add a scheduled personal property endorsement or obtain separate coverage for particularly valuable items.

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

Your policy may extend coverage to someone who occasionally drives your car with your permission, but it’s not always guaranteed. Regular users—like a roommate, partner, or teen driver—may need to be listed on your policy. And coverage for business use, deliveries, or ridesharing services often requires additional protection. Before handing over your keys, it’s a good idea to confirm who’s officially covered.

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

Even a sizable emergency fund may not be enough to withstand a major loss. Homeowners insurance protects far more than the physical structure—it can also cover liability claims, temporary housing if your home becomes uninhabitable, and personal belongings. Considering the average rebuild cost now exceeds $320,000, opting out of insurance could put your finances at serious risk.

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

Many auto policies offer coverage for rental vehicles, but usually only for personal use. If you’re renting a car for business travel or commercial purposes, your personal policy may not apply. Before declining the rental company’s insurance, double-check to avoid being caught off guard.

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

In many states, insurers use a credit-based score to help determine premiums. Research has shown that credit patterns can correlate with insurance risk. If your credit has recently improved, it’s worth reaching out to your agent—you may now qualify for a better rate.

Smart Ways to Prevent Coverage Gaps

Staying informed and keeping your coverage up to date can help you avoid costly surprises. Here are a few practical steps to stay protected:

• Review your policy annually—especially after big life events.
• Ask your agent to walk you through exclusions, so you understand exactly what’s not covered.
• Document your belongings with updated photos, values, or a household inventory to simplify future claims.
• Learn the difference between “replacement cost” and “actual cash value”—it can influence your payout after a loss.

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

When to Reevaluate Your Insurance Coverage

Life changes quickly, and your insurance should reflect those shifts. Consider revisiting your policies when:

• You buy or sell a home or vehicle
• You complete a renovation or significant upgrade
• You get married, divorced, or welcome a new child
• A new driver joins your household
• You start a business or take on a side hustle
• Your income, credit score, or financial picture changes

Whether you’ve subscribed to one of these myths in the past or simply want to ensure your protection still aligns with your needs, now is a great time to take a fresh look at your coverage. We’re here to help you understand your options and avoid unexpected gaps. Reach out anytime for a quick, no-pressure policy review.