8 Common Insurance Myths That Could Leave You Exposed

Christian Huth | Mar 11 2026 17:00

Debunking Day (March 11): 8 Common Home & Auto Insurance Myths That Could Cost You

March 11th is Debunking Day, making it the perfect time to clear up common misunderstandings about home insurance, auto insurance, flood insurance, and liability coverage.

Too often, families rely on assumptions or outdated advice when choosing coverage. Unfortunately, insurance myths can lead to serious—and expensive—surprises when a claim happens.

To help you stay properly protected, we’re breaking down eight widespread home and auto insurance myths and what you actually need to know.

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

The Truth:
Your car’s color has absolutely no impact on your auto insurance premium.

Insurance companies base pricing on factors like:

  • Make and model

  • Vehicle age

  • Engine size and performance

  • Safety ratings

  • Repair costs

  • Where you live

  • Driving history and claims record

If you’re shopping for car insurance quotes, rest easy—paint color doesn’t matter.

Myth #2: “Flood insurance is only needed in a flood zone.”

The Truth:
Flooding can happen almost anywhere. In fact, about 25% of flood insurance claims come from areas considered low-to-moderate risk.

Even more important:
👉 Most standard homeowners insurance policies do not cover flood damage.

If your area experiences rain (which nearly all do), you should at least explore flood insurance coverage.

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

The Truth:
While older vehicles may have lower market value, that doesn’t automatically mean you should drop comprehensive and collision coverage.

Consider:

  • Could you afford to replace the vehicle out-of-pocket?

  • Do you rely on it daily for work or family?

  • Would repair costs create financial strain?

At minimum, liability auto insurance is required in most states. But depending on your situation, keeping additional coverage may still make financial sense.

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

The Truth:
Homeowners insurance includes personal property coverage—but there are limits.

High-value items like:

  • Jewelry

  • Collectibles

  • Firearms

  • Fine art

  • Electronics

Often exceed standard policy limits. You may need scheduled personal property coverage or endorsements to fully protect them.

If you haven’t reviewed your home insurance policy limits recently, now is a good time.

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

The Truth:
Insurance coverage depends on usage and frequency.

While occasional drivers may be covered with permission, issues can arise if:

  • Someone regularly drives your vehicle

  • The car is used for business purposes

  • It’s used for ridesharing or delivery services

Before assuming coverage applies, confirm the details with your agent. Small gaps can create big problems during a claim.

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

The Truth:
Even strong savings may not be enough after a major loss.

Homeowners insurance protects:

  • Your home’s structure

  • Personal belongings

  • Liability if someone is injured on your property

  • Loss of use (temporary housing if your home becomes unlivable)

With rebuilding costs often exceeding $300,000, skipping coverage can expose you to significant financial risk.

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

The Truth:
Many personal auto policies extend coverage to rental vehicles—but typically only for personal use.

If you’re traveling for business or commercial purposes, your standard policy may not apply.

Before declining the rental company’s coverage, confirm what your car insurance policy covers for rental vehicles.

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

The Truth:
In many states, insurers use a credit-based insurance score when calculating premiums.

If your credit has improved, you may qualify for better rates. It’s worth requesting updated home and auto insurance quotes to see if savings are available.

How to Prevent Insurance Coverage Gaps

Proactive planning keeps your home and auto insurance aligned with your needs.

Smart Habits:

  • Review your policies annually

  • Revisit coverage after major life changes

  • Ask about exclusions and coverage limits

  • Understand “replacement cost” vs. “actual cash value”

  • Keep a home inventory with photos or video documentation

Ask yourself:
If I had to file a claim tomorrow, would I be financially prepared?

When Should You Review Your Insurance?

Life changes quickly. It’s time to review your coverage when you:

  • Buy or sell a home

  • Purchase or replace a vehicle

  • Renovate or upgrade your property

  • Get married or divorced

  • Add a teen driver

  • Start a business or side hustle

  • Experience major income or credit changes

Regular reviews help ensure your homeowners insurance and auto insurance policies keep pace with your life.

Let’s Make Insurance Simple

Insurance doesn’t have to be complicated—or stressful.

If you’d like a quick, no-pressure home and auto insurance review, we’re here to help. Whether you’re comparing quotes, reviewing flood coverage, or simply want peace of mind, we’ll walk through it clearly and make sure there are no surprises.

Reach out anytime—we’re happy to help you stay protected.