If you’re looking for insurance, you may be wondering if some of the things you’ve heard about home, auto, and life insurance are true. In this article, we’ll debunk 25 popular insurance myths. Whether you need renter’s insurance to the impact car color has on your premiums, and more, keep reading for 25 essential truths about insurance!
Home Insurance Myths Busted
1. Myth: Home insurance covers all types of damage.
Answer: Home insurance policies cover certain types of damage to your home’s structure, grounds, and personal belongings. It’s best to read your policy or talk to your insurer about what is covered and what isn’t. In some cases, you may be able to opt for add-on coverage (known as endorsements) for things that aren’t covered in your primary policy.
2. Myth: Home insurance is mandatory.
Answer: While not required by law in any state, home insurance is usually a requirement to get a mortgage. Lenders want to know the loan will be repaid one way or another, even in the event of significant damage or a total loss.
3. Myth: My landlord’s insurance covers my belongings.
Answer: Your landlord’s insurance covers the building, not your personal belongings. Renters insurance is necessary for personal property coverage. Like home insurance, renters policies cover damage to your belongings in the event of certain natural catastrophes, theft, and fire.
4. Myth: Older homes have cheaper insurance.
Answer: Home insurance premiums are based on a variety of factors including your location, the age of your home, and the materials used to build it. In some cases, older homes may have higher insurance costs than newer ones due to outdated systems and higher material costs for repairing or rebuilding.
5. Myth: Home insurance covers maintenance issues.
Answer: Home insurance typically does not cover maintenance or normal wear-and-tear. It covers sudden and accidental damage due to a covered hazard. If you want coverage for home systems (HVAC, electric, and plumbing) and appliances, a Home Warranty could be a good option. Home warranties are typically sold by different companies than home insurers. Do your research to explore different options, read customer reviews, and decide if it’s a good fit for you.
6. Myth: You don’t need home insurance once your mortgage is paid off.
Answer: Even without a mortgage, home insurance is vital to protect one of your biggest investments and assets from unforeseen events. Without insurance, are you prepared to cover the cost of repair or rebuilding on your own? For most homeowners, home insurance makes sense as a financial protection. Having liability and medical expense coverage is always a good idea, too. You can always consider a higher deductible rather than ditching the insurance.
7. Myth: Personal belongings are covered at full value.
Answer: Home insurance usually covers personal belongings at actual cash value, which factors in depreciation. For example, that new TV or laptop you bought three years ago wouldn’t have the same sale value today. Consider adding replacement cost coverage to your policy for full value reimbursement.
8. Myth: Home businesses are fully covered under home insurance.
Answer: If you operate a business out of your home, it may not be fully covered by your home insurance. You may need a separate business insurance policy for full liability protection and reimbursement for lost data or income.
9. Myth: Flood damage is covered by standard home insurance.
Answer: Flood damage is typically excluded from standard home insurance policies. If you live in a flood zone, you can purchase flood insurance through the National Flood Insurance Program (NFIP).
Auto Insurance Myths Busted
1. Myth: Red cars cost more to insure.
Answer: Contrary to popular belief, the color of your car doesn't affect your auto insurance rates. Factors like make and model, as well as your personal driving history, are more important.
2. Myth: My car insurance covers rental cars automatically.
Answer: Rental car coverage varies by policy. Verify with your insurer if rental cars are covered under your existing policy. You may also have some rental car coverage as a benefit of your credit card–check with your credit card provider.
3. Myth: Older drivers always pay more for car insurance.
Answer: Age is just one factor among many in determining your auto insurance rate. Teenagers are usually the most expensive age group, while older drivers with a clean driving record may qualify for discounts. Your insurance score, which is calculated from credit history, is another factor for home and auto rates.
4. Myth: Comprehensive coverage includes everything.
Answer: Comprehensive coverage protects against many types of non-collision damage such as theft, fire, weather, animals, and more. However, it may not cover everything. Check your policy or ask your insurer about specifics like flood damage or wear and tear.
5. Myth: Minimum liability coverage is sufficient.
Answer: Minimum liability coverage may not fully protect you in the event of a serious accident. Higher coverage limits are often recommended.
6. Myth: Only the policyholder is covered to drive the insured car.
Answer: Most policies cover anyone who has permission to drive the car, but it’s best to confirm with your insurer. Household members and regular operators of the vehicles typically need to be a rated driver.
7. Myth: New cars are always more expensive to insure.
Answer: This isn’t necessarily true–the safety features in new cars can lead to discounts and lower insurance rates.
8. Myth: My insurance covers me no matter where I drive.
Answer: Your coverage may have geographic limits. Confirm with your insurer that your policy covers you in all the areas you plan to drive.
Life & Health Insurance Myths Busted
1. Myth: Life insurance is only for the elderly.
Answer: Life insurance is important for people of all ages, especially if you have dependents or debts that would need to be paid after your death. Younger people can often qualify for lower premiums.
2. Myth: My health insurance covers all medical expenses.
Answer: Health insurance often has deductibles, co-pays, and out-of-pocket limits. It may not cover every treatment or procedure, depending on what is considered medically necessary. Understanding your plan’s details is crucial.
3. Myth: Employer-provided life insurance is sufficient.
Answer: Depending on your salary, family structure, and financial obligations, employer-provided life insurance may not offer enough coverage. Additionally, if you leave your employer, the coverage typically ceases. Consider supplemental life insurance for full protection.
4. Myth: I can’t get life insurance if I have health issues.
Answer: It depends on the insurer–some offer policies to people with pre-existing health conditions, though you may have to pay a higher premium. It never hurts to explore your options.
5. Myth: Term life insurance is a waste of money.
Answer: Term life insurance can provide more affordable coverage during specific periods of your life, such as when you are in your peak earning years and still supporting a family. Term life coverage is ideal for protecting against temporary financial obligations.
6. Myth: Health insurance isn’t necessary if you’re healthy.
Answer: Health insurance can provide coverage for routine care and preventative screening, as well as helping to cover the cost of unexpected medical emergencies. Without health insurance, a hospital stay, cancer treatment, or other type of intensive care can be financially devastating.
7. Myth: Life insurance benefits are taxable.
Answer: Life insurance benefits are generally not subject to federal income tax, providing financial security to beneficiaries.
8. Myth: I don’t need health insurance if I have life insurance.
Answer: Health insurance covers medical expenses while life insurance provides financial support to beneficiaries after your death. Both are important forms of financial protection against for yourself and your family.
About Peoples Insurance
We are here to help with all your insurance needs. Contact us to discuss your insurance needs and find the right solution for you!