8 Common Insurance Myths You Should Stop Believing

March 11th is Debunking Day, making it the perfect opportunity to untangle some of the biggest myths surrounding home and auto insurance. Many people still rely on assumptions or outdated information when it comes to their policies, and that can create real problems when it is time to file a claim. Misunderstandings may seem harmless, but they can leave you unexpectedly vulnerable when you need coverage the most.

To help clear things up, here is a fresh look at eight widespread insurance myths—and what is actually true instead.

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

The truth: While the rumor has been around forever, your car’s paint color has absolutely no impact on your premium. Insurance companies focus on details like your vehicle’s model, age, safety ratings, engine size, and typical usage. Your driving habits and history also play a major role. But whether your car is red, black, white, or neon green, its color does not influence your rate.

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

The truth: Flooding can happen almost anywhere—often where people least expect it. Roughly a quarter of all flood insurance claims originate outside high-risk flood zones. Even more surprising, traditional homeowners policies do not include flood coverage at all. If rainstorms, hurricanes, or runoff are possible in your area, flood insurance is worth a serious conversation.

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

The truth: It is true that older vehicles decrease in value, but that alone should not determine your coverage. Liability insurance is legally required in most states, regardless of your car’s age. And if you depend on your vehicle for work, school, or family obligations, you may want collision and comprehensive coverage to avoid large out-of-pocket expenses after a major accident or theft.

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

The truth: Homeowners insurance does include personal property protection, but it has limits. Specialty items like high-end jewelry, rare collectibles, art, and expensive electronics may exceed your policy’s built-in coverage. To fully protect these valuables, you may need to add scheduled personal property coverage or a separate policy tailored to those items.

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

The truth: Coverage depends on the situation. Many policies extend to occasional drivers you allow behind the wheel, but exceptions exist—especially if the car is being used for business, delivery work, or ridesharing. If someone regularly uses your vehicle or drives it for commercial purposes, it is important to confirm whether your policy covers them.

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

The truth: Even a strong savings account may not be enough to recover from a major home-related loss. Homeowners insurance covers far more than the structure alone. It provides liability protection if someone is injured on your property, loss-of-use coverage if your home becomes uninhabitable, and protection for your belongings. With home rebuild costs now averaging more than $320,000, skipping coverage is an enormous financial gamble.

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

The truth: Many personal auto policies do extend to rental cars, but usually only for personal use. If you are renting for work, a business trip, or a commercial purpose, your personal policy may not apply. Before declining the rental company’s insurance, it is smart to double-check your coverage.

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

The truth: In many states, insurers use a credit-based score as one of several tools when calculating premiums. This is because credit patterns can correlate with claim risk over time. If your credit has improved, it is worth asking your agent to review your policy—you may qualify for better pricing.

Quick Tips to Prevent Coverage Gaps

Staying informed and proactive can help you avoid unpleasant surprises later on. Here are a few smart habits to keep your protection strong:

• Review your policy every year, especially after major life or property changes.
• Ask your agent about exclusions so you know exactly what your policy does not cover.
• Keep a home inventory—photos, receipts, or a simple list—to make future claims easier.
• Understand the difference between “replacement cost” and “actual cash value,” since it affects how much you receive after a loss.

As you review your coverage, consider the question: “Would I be financially prepared if I needed to file a claim tomorrow?” It is a great way to gauge whether your policy fits your current needs.

When You Should Revisit Your Insurance Policies

Your life can change quickly, and your insurance should evolve right along with it. It is a good idea to reassess your coverage when:

• You buy or sell a home or vehicle
• You complete renovations or major upgrades
• You get married, divorced, or welcome a child
• A teen or another new driver joins your household
• You start a side business or new venture
• Your income, credit score, or financial situation shifts

Whether you previously believed one of these myths or just want to double-check that your coverage still makes sense, now is an ideal time to take a closer look. Staying informed is one of the best ways to avoid unexpected gaps—and we’re here to help you navigate every step.

If you’re ready for a quick, no-pressure policy review, reach out anytime. Our team is always happy to help you make confident, informed insurance decisions.