8 Common Insurance Myths That Could Leave You Unprotected
Mar 18 2026 15:00
Scott Welch

March 11th may be known as Debunking Day, but clearing up confusion around insurance is helpful any time of year. Plenty of homeowners and drivers unknowingly rely on outdated assumptions or straight-up misinformation when it comes to their coverage. Unfortunately, believing the wrong thing at the wrong time can create major financial stress if you ever need to file a claim.

To help you stay ahead of potential gaps, we’ve reexamined eight popular insurance myths and what you should actually keep in mind instead.

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

 

The truth: The color of your vehicle has zero impact on your auto insurance rate. Whether your car is red, silver, black, or neon green, insurers aren’t factoring color into your premium. What does matter are details like the car’s make and model, safety features, age, engine type, your driving history, and how much you use the vehicle. Paint color doesn’t make the list.

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

 

The truth: Flooding can happen almost anywhere. About a quarter of all flood insurance claims come from properties located outside of designated high-risk zones. Even more important, most standard homeowners insurance policies don’t include flood protection. If you live in an area where it rains — which is pretty much everywhere — flood coverage is worth exploring.

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

 

The truth: It’s true that older cars lose value over time, but that doesn’t automatically make full coverage unnecessary. Liability coverage is still required in most states, regardless of your vehicle’s age. And if you rely on your car for daily transportation and wouldn’t be able to cover repair or replacement costs after a major accident, collision and comprehensive coverage might still be a smart choice.

Myth #4: “My homeowners insurance covers everything in my house.”

 

The truth: Homeowners insurance does include protection for personal property, but that coverage typically has limits tied to a percentage of your home’s insured value. High-value items — such as luxury jewelry, rare collectibles, or premium electronics — can exceed those limits. To fully protect those belongings, you may need to add individual item coverage or secure a separate policy.

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

 

The truth: Coverage for other drivers isn’t guaranteed and often comes with boundaries. Many policies will extend coverage to someone you occasionally allow to use your vehicle, but this can change if the driving is frequent or tied to business activities such as deliveries or rideshares. If someone else uses your car regularly or for work-related purposes, confirm they’re properly covered.

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

 

The truth: Even a well-funded emergency account may not be enough to handle the financial fallout from a major home disaster. Homeowners insurance offers far more than protection for the structure itself. It can include liability coverage if someone is hurt on your property, reimbursement for temporary housing if your home becomes unlivable, and protection for your personal belongings. Considering that rebuilding a home now costs well over $320,000 on average, going without insurance is a significant risk.

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

 

The truth: Many auto policies do transfer to rental vehicles, but this typically only applies when the rental is used for personal reasons. If the rental is for business travel or commercial activities, your personal policy may not cover it. It’s always best to verify with your insurer before turning down the rental company’s coverage.

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

 

The truth: In many states, insurers use a credit-based insurance score when calculating your rate. The reasoning is that credit patterns can sometimes reflect risk behaviors. If your credit has recently improved, it may be worth checking with your agent to see if your premium can be adjusted.

Quick Tips to Prevent Coverage Gaps

 

Taking time to stay informed about your insurance can help you avoid unpleasant surprises later. Here are a few helpful habits to keep you protected:

  • Review your policy every year, especially after major life or property changes.
  • Ask your agent about exclusions so you know exactly what isn’t covered.
  • Document your belongings with photos or an inventory to simplify claims.
  • Learn the difference between “replacement cost” and “actual cash value,” as each affects your payout differently.
  • Ask yourself whether you’d be financially comfortable filing a claim today — and adjust your coverage if the answer is no.

When to Revisit Your Insurance Coverage

 

Life moves quickly, and your insurance needs can shift just as fast. Consider reassessing your policies when any of the following occur:

  • You buy or sell a home or vehicle
  • You complete a remodel or significant upgrade
  • You get married, divorced, or welcome a new child
  • A teen or new driver joins your household
  • You begin a business or side hustle
  • Your financial situation, credit score, or income changes

Whether you’ve held onto one of these myths or simply want to confirm your coverage still fits your life, now is a great time to take a closer look. We’re here to help you make confident, informed decisions and avoid unexpected gaps. Reach out anytime to schedule a quick, low-pressure policy review.