8 Common Insurance Myths That Could Leave You Vulnerable

March 11th is Debunking Day, making it the perfect opportunity to clear up some of the most persistent misunderstandings in home and auto insurance. Many people base their decisions on old or inaccurate information, and unfortunately, that can result in major financial trouble when an unexpected loss occurs.

Below, we’ll walk through eight widespread insurance myths and explain what you should really know so you can feel confident and protected.

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

The truth: The color of your vehicle has absolutely no impact on your insurance premium. Insurers never factor in color—red or otherwise—when calculating your rate. What they do consider includes the car’s age, model, safety features, engine type, your driving history, and where and how often you drive. Color simply doesn’t play a role.

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

The truth: Flooding is not limited to high-risk areas. In fact, roughly 25% of flood insurance claims come from properties located outside designated flood zones. Even more surprising, most standard homeowners policies do not cover flood-related damage at all. If you live anywhere it rains, flood insurance is something worth evaluating.

Myth #3: “My older vehicle doesn’t need full coverage.”

The truth: While older cars do depreciate, that doesn’t automatically mean you should drop important protections. Nearly every state still requires liability coverage, regardless of the car’s age. And if you rely heavily on your vehicle—or would struggle financially to repair or replace it after a major accident—keeping collision or comprehensive coverage may still be a smart decision.

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

The truth: Homeowners insurance typically includes personal property coverage, but the amount is usually capped at a percentage of your home’s insured value. High-value belongings—such as fine jewelry, artwork, designer electronics, or collectibles—can easily exceed those limits. To ensure full protection, you may need to schedule these items separately or add specific endorsements.

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

The truth: It depends. Your policy may extend coverage to occasional drivers you’ve given permission to use your vehicle, but there are important limitations. Business use, delivery driving, and ridesharing often fall outside standard policy protections. If another driver regularly uses your car or operates it for work, it’s essential to confirm they’re properly insured under your policy.

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

The truth: Even a healthy bank account may not be enough to withstand the financial hit from a major loss. Homeowners insurance covers far more than the physical structure—it also includes liability protection, loss of use benefits if your home becomes unlivable, and coverage for your personal possessions. With the average home rebuild cost now exceeding $320,000, skipping insurance is a tremendous gamble.

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

The truth: Many personal auto policies do cover rental cars—but usually only for personal use. If you rent a vehicle for business or commercial purposes, your individual policy likely won’t apply. Before declining the rental company’s insurance option, double-check your coverage so you’re not caught off guard.

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. These scores are not the same as typical credit scores, but they often correlate with risk patterns. If your credit standing has improved recently, it may be worth reaching out to your agent—your rate could potentially be lowered.

Smart Ways to Prevent Coverage Gaps

Staying ahead of potential issues can save you from unwelcome surprises down the road. Here are a few practical steps to keep your protection up to date:

• Review your policy every year, especially after major life changes.
• Ask your agent to clarify exclusions—understanding what isn’t covered is just as important as knowing what is.
• Document your possessions with photos, values, or an inventory to simplify future claims.
• Learn the difference between “replacement cost” and “actual cash value,” as this can influence your payout.

A helpful question to reflect on: “Would I be financially secure if I had to file a claim tomorrow?”

When It’s Time to Revisit Your Insurance Policy

Your life evolves—and your coverage should evolve along with it. Plan to reassess your policies when:

• You purchase or sell a home or car
• You complete major renovations or upgrades
• Your family structure changes—marriage, divorce, or new children
• A teenager or new driver joins your household
• You launch a business or begin a side hustle
• Your income, credit score, or financial situation shifts

Whether you’ve held onto one of these myths or simply want to confirm your coverage still supports your current needs, now is an excellent time to take a closer look. We’re here to help you understand your options and avoid unexpected coverage gaps. Reach out anytime to schedule a quick, no-pressure policy review.