7 Common Insurance Myths Busted

Insurance is one of the most important tools we use to protect our finances, yet it's often surrounded by confusion and misinformation. From old wives' tales about car color to misunderstandings about what a policy actually covers, these myths can cost you money and leave you unprotected. Let's bust seven of the most common insurance myths once and for all.

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Myth 1: Red Cars Cost More to Insure

Reality: The color of your car has absolutely no effect on your insurance premium. Insurers care about the make, model, year, body type, engine size, and safety rating of your vehicle—not its paint job. The myth likely started because sports cars, which are often red, tend to cost more to insure due to their higher risk profile.

Myth 2: My Landlord's Insurance Covers My Belongings

Reality: This is one of the most dangerous and common myths for renters. Your landlord's policy only covers the physical building and the landlord's property. It offers zero protection for your furniture, electronics, clothing, or other personal items. If a fire, flood, or break-in occurs, your personal belongings are completely unprotected without a separate renters insurance policy.

Myth 3: Life Insurance is Only for Rich People

Reality: The opposite is true. Life insurance is most crucial for people with financial dependents who would struggle to survive without their income. An affordable term life insurance policy is one of the smartest ways for a regular family to protect their loved ones from financial hardship if the unexpected happens.

Myth 4: My Old Car Doesn't Need Collision or Comprehensive Coverage

Reality: While it might be tempting to drop these coverages to save money on an older vehicle, it could be a costly mistake. If you get into an at-fault accident, collision coverage pays for your vehicle's damage. Without it, you would have to pay for all repairs or replacement out of pocket. Even if you don't care about the car's value, comprehensive coverage protects you from theft, vandalism, and fire—risks that exist no matter how old the car is.

Myth 5: All My Medical Bills Will Be Paid by My Health Insurance

Reality: This is a dangerous assumption. Your health insurance policy has a **deductible** (what you pay before they start paying), a **copay** (a fixed fee for a service), and **coinsurance** (a percentage of the bill you're responsible for). Until you meet your out-of-pocket maximum, you will always have some financial responsibility for your medical bills.

Myth 6: My Homeowners Insurance Covers Everything

Reality: A standard homeowners policy does not cover damage from **floods** or **earthquakes**. These disasters require separate, specialized policies. Additionally, standard policies often don't cover damage from a lack of maintenance or neglect, such as mold from a long-term, un-repaired leak.

Myth 7: My Car Insurance Premium Will Always Get Cheaper as I Get Older

Reality: While premiums typically drop in a person's 20s and 30s as their driving experience grows, they can begin to rise again in a person's 60s and 70s. This is because statistics show that drivers over a certain age have a higher accident rate. Other factors like a clean driving record and a good credit score continue to play a big role throughout life.

Conclusion

Navigating the world of insurance can be tricky, but getting your facts straight is the best way to ensure you have the right protection at the right price. Always read your policy documents carefully and don't be afraid to ask an insurance professional to clarify any terms you don't understand.