8 common insurance myths explained

Debunking Day on March 11th is the perfect excuse to clear up some long-standing confusion about home and auto insurance. Many people base their decisions on outdated assumptions or half-true advice, and those misconceptions can create costly surprises when it’s time to file a claim. To help you stay protected, here’s a fresh look at eight persistent myths—and what you should actually believe instead.

Myth #1: Red cars cost more to insure

This belief has stuck around for years, but your vehicle’s color has no impact on your premium. Insurance companies focus on things like the car’s make and model, engine size, age, safety features, and how you drive. Your personal driving record plays a major role as well. The paint color, whether bright red or basic black, is never part of the equation.

Myth #2: You don’t need flood insurance outside a flood zone

It’s easy to assume flooding only impacts high‑risk areas, but the numbers tell a different story. Roughly one-quarter of all flood-related insurance claims come from homeowners who live outside of designated flood zones. Most standard homeowners policies don’t cover flood damage at all, which means even a heavy storm could leave you footing the bill. If rainfall is a part of your local climate, flood insurance is worth evaluating.

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

While older vehicles lose value over time, that doesn’t automatically mean you should scale back your coverage. Most states still require liability insurance regardless of the car’s age. And if your vehicle is essential to your daily life, the cost of repairing or replacing it after an accident may still be too much to handle out of pocket. In those cases, maintaining collision and comprehensive coverage can offer valuable protection.

Myth #4: Homeowners insurance covers everything you own

Homeowners policies do include personal property protection, but there are limits—often based on a percentage of your home’s insured value. High-value items such as jewelry, collectibles, art, or premium electronics may exceed those limits. If you want full replacement protection for those categories, you may need to add separate endorsements or schedule those items with your insurer.

Myth #5: Anyone who drives your car is automatically covered

Coverage for other drivers isn’t guaranteed. While many policies allow occasional use with your permission, there are important exceptions. Business use, delivery driving, and ridesharing typically require separate coverage. If someone regularly drives your car—whether a friend, family member, or employee—you’ll want to confirm they’re fully listed on your policy to avoid unexpected gaps.

Myth #6: Good savings make homeowners insurance unnecessary

Even a strong emergency fund may not withstand the financial fallout of a serious home-related loss. Homeowners insurance protects far more than your structure—it can cover liability if someone gets hurt on your property, help pay for temporary living arrangements if your home becomes uninhabitable, and replace personal belongings. With average rebuilding costs now exceeding $320,000, going uninsured creates significant financial risk.

Myth #7: Your auto policy automatically covers rental cars

Many personal auto policies extend coverage to rental vehicles, but primarily for personal use only. If you’re renting a car for business travel, delivering goods, or any commercial purpose, your personal policy may not apply. Always verify before saying no to extra protection from the rental company.

Myth #8: Credit scores don’t influence insurance rates

In many states, insurers can consider a credit-based insurance score when determining your premium. Data shows that credit patterns often correlate with risk, which is why the metric is sometimes included. If your credit has recently improved, it may be worth checking in with your agent—you might qualify for more favorable rates.

Quick ways to avoid accidental coverage gaps

Staying informed and proactive can go a long way toward ensuring your insurance works as intended. A few helpful habits include:

• Reviewing your policies at least once a year, especially after major life or property changes.
• Asking your agent about exclusions so you clearly understand what isn’t covered.
• Keeping a documented inventory of your belongings, including photos and approximate values.
• Learning the difference between replacement cost and actual cash value, as this affects claim payouts.

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

When to revisit your insurance coverage

Life evolves quickly, and your insurance should evolve with it. It’s wise to conduct a policy review whenever:

• You buy or sell a home or vehicle.
• You complete a renovation or significant upgrade.
• You experience major life changes such as marriage, divorce, or the arrival of a child.
• A new driver joins your household—especially a teenager.
• You launch a business or begin a side gig.
• Your financial situation, credit score, or income shifts meaningfully.

If any of these situations apply—or if you’re simply rethinking long-held assumptions—now is a great time to take a closer look at your coverage. Understanding the truth behind these myths can help you stay fully protected and avoid surprises down the road. Whenever you’re ready for a no-pressure policy review, we’re here to help you make confident, informed decisions.