8 Insurance Myths That Could Leave You Unprotected

Many people unknowingly base their home and auto insurance decisions on outdated information, and that can create major coverage gaps when unexpected events happen. In honor of Debunking Day on March 11th, this is a perfect time to clear up common misconceptions and understand what your insurance really does—and doesn’t—cover. This updated guide breaks down eight persistent myths and explains what you should believe instead.

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

Despite the long‑standing rumor, the color of your vehicle has nothing to do with your insurance premium—red or otherwise. Insurers look at factors that actually relate to risk, such as your car’s make and model, safety features, engine size, age, how often you drive, and your driving record. The color never influences the price you pay.

Myth #2: “Only homes in flood zones need flood insurance.”

Flooding can happen almost anywhere, not just in high‑risk areas. Roughly one‑quarter of all flood insurance claims come from properties located outside designated flood zones. Most homeowners insurance policies exclude flood damage entirely, so if you live in an area where it rains, it’s worth evaluating whether flood insurance could be a smart added layer of protection.

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

While older vehicles do lose value over time, deciding to drop certain coverages isn’t always straightforward. Liability insurance is still legally required in most states, regardless of your car’s age. And if you depend on your vehicle and wouldn’t be able to cover significant repairs or a replacement after a crash, maintaining collision and comprehensive coverage may still be important.

Myth #4: “Homeowners insurance covers every item I own.”

Homeowners policies include personal property coverage, but this protection is tied to a percentage of your home’s insured value and often comes with limits for specialty items. High‑value belongings—such as jewelry, rare collectibles, or premium electronics—can exceed those limits. To fully safeguard these pieces, you may need to list them individually through add‑on endorsements or separate policies.

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

Coverage for other drivers isn’t automatic. Many policies do extend protection to occasional drivers who have your permission, but there are important restrictions. Business use, delivery driving, or rideshare activity can create gaps your policy may not cover. If someone routinely drives your vehicle or uses it for work, confirm with your insurer that they’re properly added to your policy.

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

Savings alone may not be enough to absorb the financial impact of a major loss. Homeowners insurance goes beyond the structure of your house—it also provides liability coverage, helps pay for temporary living expenses if your home becomes uninhabitable, and protects your personal items. With the average home rebuild cost now exceeding $320,000, opting out of coverage is a substantial risk.

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

Some personal auto policies do extend coverage to rental vehicles, but typically only for personal use. If you’re renting a car for business‑related travel or commercial purposes, your personal policy may not apply. Before declining the rental company’s insurance, double‑check your policy details to avoid unexpected surprises.

Myth #8: “My credit score has no impact on insurance pricing.”

In many states, insurers use what’s known as a credit‑based insurance score when determining premiums. This is because statistical data shows a correlation between credit patterns and certain types of risk. If your credit has recently improved, it’s worth talking with your agent—you may qualify for a more favorable rate.

Quick Tips to Avoid Costly Coverage Gaps

Taking simple steps today can help prevent major headaches later. Consider these smart habits to keep your protection strong:

• Review your insurance once a year, especially after major milestones or changes in your life.
• Check in with your agent about exclusions so you understand what falls outside your policy.
• Document your belongings or keep photos of your vehicle’s condition to simplify future claims.
• Learn the difference between “replacement cost” and “actual cash value,” as this impacts your claim payout.
• Ask yourself whether you could comfortably handle the financial hit of filing a claim tomorrow.

When to Revisit Your Insurance Coverage

Life evolves quickly, and your insurance should adapt alongside it. It’s a good idea to reassess your policies when:

• You purchase or sell a home or vehicle
• You complete renovations or add major upgrades
• You experience major life changes such as marriage, divorce, or welcoming a child
• A teen driver or another household member begins driving
• You launch a business or start a side venture
• Your financial situation, income, or credit score changes significantly

Whether you’ve believed one of these long‑standing myths or simply want added confidence that your coverage still fits your needs, now is a great time to take a closer look at your policies. A quick review can help you avoid unexpected gaps and make more informed insurance decisions. Reach out anytime to schedule a friendly, no‑pressure policy check‑in.