March 11th is Debunking Day, which makes it the perfect moment to shine a light on some of the biggest misconceptions surrounding home and auto insurance. Many people make coverage decisions based on hearsay or long-standing myths—and unfortunately, those misunderstandings can cause real financial trouble when it’s time to file a claim.
To help clear things up, we’ve reexamined eight persistent insurance myths and what you should know instead.
Myth #1: “Red cars cost more to insure.”
The truth:
The color of your vehicle has zero impact on your insurance premium. Whether your car is red, silver, or bright purple, insurers don’t factor paint color into their pricing. Instead, they focus on details like the vehicle’s make, model, age, safety features, repair costs, mileage, and your personal driving record. Color simply isn’t part of the equation.
Myth #2: “Flood insurance is only for people who live in flood zones.”
The truth:
Flooding can happen almost anywhere, not just in designated high-risk areas. In fact, roughly a quarter of all flood insurance claims originate outside traditional flood zones. Even more surprising—standard homeowners policies typically exclude flood damage altogether. If your area gets rain, flood insurance may be a worthwhile addition to your protection plan.
Myth #3: “Older cars don’t need full coverage.”
The truth:
While older vehicles do lose value over time, that doesn’t mean they no longer need protection. Most states require liability coverage for all vehicles on the road, regardless of age. And if you depend on your car daily, think realistically about whether you could afford repairs or replacement out of pocket after a major accident. In many cases, collision or comprehensive coverage is still valuable even for aging vehicles.
Myth #4: “My homeowners policy covers all of my belongings.”
The truth:
Homeowners insurance does include personal property coverage, but it’s usually limited to a set percentage of your total dwelling coverage. High-value items—like jewelry, collectibles, artwork, or advanced electronics—may exceed those limits. To fully protect more expensive possessions, you may need special endorsements or separate scheduled coverage.
Myth #5: “Anyone who drives my car is covered under my insurance.”
The truth:
Coverage for other drivers isn’t always guaranteed. While many policies extend protection to occasional drivers who have your permission, certain situations—such as business use, delivery driving, or rideshare activity—may not be covered. If another person regularly uses your vehicle or drives it for work, you’ll want to verify that they’re appropriately insured under your policy.
Myth #6: “If I have strong savings, I don’t need homeowners insurance.”
The truth:
Even a solid emergency fund is no substitute for homeowners insurance. Beyond covering your house itself, your policy typically includes liability protection, coverage for personal belongings, and help with living expenses if you’re unable to stay in your home after a covered loss. Considering that the average home rebuild now costs over $320,000, skipping insurance could create far more risk than reward.
Myth #7: “My auto insurance automatically applies to rental cars.”
The truth:
Some personal auto policies do extend to rental cars—but usually only for personal travel. If you’re renting a vehicle for business or commercial purposes, your policy may not apply. Before you decline the rental company’s coverage, take a moment to confirm what your existing policy actually includes.
Myth #8: “My credit score doesn’t affect my insurance rate.”
The truth:
In many states, insurers use a credit-based insurance score to help determine premiums. This is because credit patterns often correlate with claim risk. If your credit has improved, it may be worth mentioning to your agent—you could potentially qualify for better rates.
Tips to Help You Avoid Coverage Gaps
Staying proactive with your insurance can prevent unwelcome surprises down the road. Here are a few smart habits that can help keep your protection up to date:
- Review your policies each year, especially after significant life changes.
- Ask your agent about exclusions—understanding what isn’t covered is critical.
- Keep an updated home inventory or photos of your vehicle to simplify future claims.
- Learn the difference between “replacement cost” and “actual cash value,” as they can significantly affect payouts.
- Reflect honestly on whether you’d be financially prepared if you had to file a claim tomorrow.
When to Revisit Your Insurance Coverage
Your life evolves—and your insurance should, too. It’s a good idea to reassess your coverage whenever:
- You buy or sell a home or car
- You complete major renovations or upgrades
- You experience major family changes, such as marriage, divorce, or welcoming a child
- A new driver joins your household
- You start a business, side gig, or begin using your home or vehicle for work
- Your income or credit score shifts significantly
If you’ve ever believed one of these myths—or just want to double-check that your current policies still align with your needs—now is the ideal time to take another look. We’re here to help you understand your coverage, identify potential gaps, and make confident decisions about your protection.
Reach out any time to schedule a quick, no-pressure policy review.