8 Insurance Myths That Could Leave You Exposed

With Debunking Day coming up, there’s no better moment to clear up some of the biggest misunderstandings surrounding home and auto insurance. Plenty of people rely on old advice or assumptions that simply aren’t accurate anymore. Unfortunately, believing these myths can lead to costly surprises when it’s time to file a claim.

To help you stay protected, here’s a fresh look at eight long-standing insurance myths—along with the reality behind each one.

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

The truth: Your car’s paint color has nothing to do with your insurance premium. Insurers look at factors like the vehicle’s age, make and model, engine type, safety ratings, mileage, and your driving history. Color isn’t part of the equation, so a red car won’t cost you more than any other shade.

Myth #2: “Flood insurance only matters if you’re in a flood zone.”

The truth: Flooding can happen almost anywhere, and roughly one-quarter of flood insurance claims come from outside designated high-risk zones. Even worse, most standard homeowners policies don’t include flood coverage at all. If rainfall is a reality where you live, flood insurance is something worth evaluating.

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

The truth: While older cars lose value over time, liability coverage is still required in most states regardless of age. Plus, if you rely heavily on your car and couldn’t afford repairs or replacement after a major accident, collision and comprehensive coverage could still save you from an expensive setback.

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

The truth: Homeowners policies do include personal property protection, but those benefits usually come with dollar limits tied to your home’s insured value. High-value belongings—like fine jewelry, rare collectibles, or premium electronics—might exceed those limits. To fully protect them, you may need item-specific coverage or additional endorsements.

Myth #5: “Anyone driving my car has coverage automatically.”

The truth: Your policy may extend to occasional drivers you permit to use your car, but that protection isn’t unlimited. Regular drivers, business-related use, delivery services, and ridesharing can all create gaps in coverage. If someone uses your vehicle frequently or for work, make sure your policy accounts for it.

Myth #6: “I can skip homeowners insurance because I have strong savings.”

The truth: Even a solid financial cushion may not absorb the cost of a major disaster. Homeowners insurance covers far more than your physical structure—it also includes liability protection, coverage for personal items, and support for temporary living expenses if your home becomes uninhabitable. With rebuild costs now averaging over $320,000, going uninsured is a major gamble.

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

The truth: Many personal auto policies do extend to rental vehicles, but only when used for personal travel. If you’re renting for business or commercial use, you may not be covered. Before turning down the rental company’s insurance, confirm what your policy actually includes.

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

The truth: In many states, insurers rely on a credit-based insurance score to help determine premiums. Research shows that certain credit patterns can correlate with claim risk. If your credit has improved, it’s worth checking with your agent—you might qualify for better pricing.

Smart Ways to Avoid Coverage Gaps

Staying on top of your insurance needs can help you avoid unwelcome surprises down the road. A few helpful steps include:

• Review your policies every year, especially after major life or property changes.
• Ask your agent to clarify exclusions—knowing what’s not covered is just as important as what is.
• Keep an updated inventory of your belongings, including photos or value estimates.
• Understand the difference between “replacement cost” and “actual cash value,” since both can impact your claim payout.

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

When to Revisit Your Insurance Policies

Your life changes—and your coverage should adjust along the way. Consider reviewing your insurance whenever:

• You buy or sell a home or car
• You finish a renovation or major upgrade
• You get married, divorced, or welcome a child
• A teen or new driver joins the household
• You launch a business or take on a new side gig
• Your income, credit score, or financial situation shifts

Whether you’ve believed some of these myths or simply want peace of mind, now is a great time to make sure your protection still fits your life. We’re here to help you understand your options and avoid unexpected coverage gaps. Reach out whenever you’re ready for a quick, friendly policy review—no pressure, just clarity.