Insurance Myths and Misconceptions

Unlock the truth about insurance myths! From coverage misconceptions to agent suspicions, let’s debunk 10 common beliefs to ensure you’re well-informed.

1. Insurance covers any kind of damage

Myth: Many believe insurance will cover any damage to their property, regardless of the cause.

Reality: This myth may have originated from a misunderstanding of the comprehensive nature of insurance policies. Insurance policies have specific terms and conditions. While they cover a wide range of risks, not all damages are eligible. For example, some often exclude certain types of damage, such as natural disasters or wear and tear. Understanding your policy’s details is crucial to avoiding surprises during a claim.

2. Insurance automatically covers home businesses

Myth: Homeowners think their insurance extends to cover their home-based businesses.

Reality: The assumption that home insurance covers business-related risks likely stems from a belief that a home is a comprehensive package. However, standard homeowners’ policies are not designed to protect business liabilities or business-related property damage or loss of assets. A separate business insurance policy may be necessary to ensure adequate protection.

3. Red cars cost more to insure

Myth: The color of your car affects your insurance premium.

Reality: This misconception could have its roots in the stereotype that red cars are associated with riskier drivers. In reality, insurers base premiums on factors like accident history, vehicle make, model, and year — as well as the policyholder’s driving record.  Any correlation between monthly premium and the car’s color is a wive’s tale.

4. Insurance is pointless for renters

Myth: Renters believe they don’t need insurance because they don’t own the property.

Reality: This idea couldn’t be further from the truth, and it may arise from the assumption that a landlord’s insurance covers a renter’s belongings.  In reality, renter’s insurance protects personal belongings, provides liability coverage, and covers additional living expenses if the rental unit becomes uninhabitable due to a covered loss like a fire, flood, or other damage. It’s a crucial safety net often overlooked by many. 

5. I can borrow my friend’s car, and their insurance will cover me

Myth: Borrowers assume the owner’s automobile insurance will cover any accidents.

Reality: We’re thinking that this myth may have been born from the confusion about whether automobile insurance follows the driver or the car. Insurance generally follows the car, so if you’re at fault in an accident involving a borrowed vehicle, their insurance will likely be the primary coverage. However, insurance policies can vary, and it’s crucial to check with your friend’s insurance provider to confirm the details of their coverage. Additionally, if the damages exceed the coverage limits of your friend’s policy, you might be held personally responsible for the remaining costs.

6. Full coverage means everything is 100% covered

Myth: Policyholders believe full coverage means they’re completely protected.

Reality: The origin of this misconception probably got its start in not knowing the definition of the term itself. Full coverage refers to a combination of coverages —  liability, comprehensive, and collision. It doesn’t mean every possible scenario is covered. Understanding your policy’s specifics is essential to avoid gaps in coverage.

7. Life insurance is only for the elderly

Myth: Young individuals think life insurance is unnecessary until later in life.

Reality: This myth could be attributed to a lack of awareness about the benefits of life insurance at a younger age. Purchasing life insurance early on can provide more affordable premiums. It provides financial protection for loved ones in case of unexpected events, making it a wise investment at any life stage.

8. Health insurance covers everything

Myth: Some believe health insurance covers all medical expenses without any out-of-pocket costs.

Reality: The idea that health insurance is all-encompassing may have grown from a lack of understanding about deductibles, copayments, and coinsurance. There are almost always out-of-pocket costs, including for prescription drugs. Understanding the terms and conditions of your plan helps you manage your healthcare costs effectively. 

9. No-fault insurance means nobody is at fault

Myth: Drivers with no-fault insurance assume no one is held responsible for accidents.

Reality: Just like the misconception about the term “full coverage,” this myth likely originates from confusion about the term no-fault. No-fault insurance means your own insurance pays for your injuries regardless of who caused the accident. It doesn’t eliminate fault in legal contexts to establish responsibility for the accident. 

10. Insurance agents are out to get you

Myth: Some believe insurance agents don’t always have clients’ best interests in mind.

Reality: This skepticism might arise due to misplaced trust in the agent’s role. While most agents genuinely prioritize client interests, it’s important to remember that they may operate on commission. Individuals should be proactive, ask questions, and invest time in understanding policies independently to ensure they receive the necessary coverage. If there’s a sense of being pushed into a policy that feels excessive or inadequate, consider reaching out to another agent. Alternatively, partner with Guided Solutions, a highly rated branch of Baldwin Risk Partners, for guidance in property insurance, vehicle insurance, life insurance, Medicare, and business insurance.

Don’t fall for myths, get informed!

Now that we’ve debunked these insurance myths, it’s clear that being well-informed is key to maximizing your coverage. Whether it’s understanding your policy’s specifics, recognizing the need for additional coverage, or partnering with trustworthy experts like Guided Solutions, taking proactive steps ensures you’re protected.

With a broker’s assistance, you can reduce risk, save money, and avoid the inconvenience of searching for insurance alone. So, when you’re ready, look no further than Guided Solutions. We’ll connect you with a wide range of options, offer honest advice tailored to your unique situation, save you money, and provide ongoing support when you need it most. 

With us on your side, you can rest easy knowing that you’re in good hands. Remember, informed decisions today pave the way for a secure tomorrow. Let’s get you insured!


Stay updated on our latest insurance advice and news by subscribing to our newsletter.

See what you could save

Don't let potential savings pass you by! Let us reshop insurance for you.

Share on Social