12 Insurance Myths Debunked

Remember as a kid when you would whisper in the person’s ear next to you, then they would whisper in the ear of the person sitting next to them, and so on? By the time it would wrap around the room and get back to you your story would be anything but what you started with. Insurance has a tendency to be like that.

Below are 12 insurance myths debunked for you.

Myth 1:  Red cars are more expensive to insure

The color of your car doesn’t affect your insurance premium.

Myth 2:  My auto insurance will be cheaper when I turn 25

That’s not necessarily the case. Is your driving history clean (i.e. tickets or accidents)?

Did you recently upgrade your car?

Every insurance company will have slightly different guidelines. So don’t bank on a huge savings on your 25th birthday.

Myth 3:  Comprehensive coverage covers any and everything

Comprehensive (also known as Other Than Collision) auto coverage doesn’t cover your auto for everything.

Comprehensive coverage will repair or replace your auto if you experience one of these accidents:

• Hitting an animal
• Fire
• Wind
• Hail
• Flood
• Theft
• Vandalism

Comp coverage does not cover you or your auto in one of these types of events:

• Injuries or fatalities to anyone in your auto or another auto.
• Collisions with other autos (or buildings or trees).
• Medical expenses for you or your passengers.

Myth 4:  My friend borrowed my car so her insurance pays

False, insurance follows the auto, not the driver.

Let’s say you borrow my car to pick up some groceries and you cause an accident, it will be my auto insurance that pays for the other parties’ injuries and damages to their auto.

NOTE: In the event my auto insurance limits become exhausted, the driver of the car may be held responsible. Therefore the drivers auto insurance could looked to for the remaining payout for injuries/damages.

Myth 5:  Stay-at-home parents don’t need life insurance

Stay-at-home parents don’t receive a regular salary, therefore don’t need life insurance…

False!

That statement (or anything close to that) is so far from the truth. It doesn’t matter if you’re a male or female stay-at-home parent, you take care of the tangible and intangible tasks of running a home. If you suddenly weren’t in the picture, who will do those duties? Could you afford to pay someone to help with the day-to-day tasks?

Myth 6:  The stuff in my car is covered by my car insurance policy

It’s Friday afternoon. Jeff runs into the bank to cash his paycheck. On his way out he notices his car window is broken. Glass everywhere. Jeff’s iPad, text books, fishing gear, and Air Jordans are stolen from his car in the parking lot.

Jeff’s car insurance will cover him, right?

Wrong…Personal property items such as these fall under his Renters or Homeowners Insurance.

Myth 7:  My personal car insurance covers me for business use

I wouldn’t risk it.

A Personal Auto Policy is distinctly different from a Commercial Auto Policy. If you’re using your truck to push snow in the winter or delivering pizza with your car and haven’t talked with your independent insurance agent, you may not be covered.

It’s not uncommon for a Personal Auto Policy claim to be denied because the auto was used for business purposes.

Myth 8:  Home insurance covers general maintenance

Last week’s wind blew so hard, the storm door slipped out of my hand and broke the hinges. No worries, I have home insurance.

Your kids clogged the toilet again. Better call the insurance agent…

On the coldest day of the year and my furnace repairman tells me I’m going to have to replace my furnace…Homeowner insurance better cover this.

No, negative, not for all the tea in China…these are not things you should turn in to your homeowners insurance.

Maintenance items (like the ones above) are not insurance claims. Insurance is not designed to be a maintenance plan. If you own a home long enough, maintenance will be needed at some point in time.

Myth 9:  Flood damage is covered by my Homeowners Insurance

Unfortunately, the answer is no. Flooding is not covered on a homeowners policy. Flood insurance is a separate policy.

Myth 10:  If I pull a trailer it’s covered no matter what

If you’re pulling a trailer with your truck or SUV, liability coverage is extended from the auto pulling the trailer. If the trailer comes unhooked and damages a car, liability coverage from the vehicle pulling the trailer would extend.

Physical damage to your trailer is not automatically covered. You must add Comprehensive to your trailer if you’re worried about fire, theft, vandalism, or a large animal running into the side of it.  Otherwise physical damage is not automatically covered.

NOTE: Commercial auto policies require trailers to be listed on your auto policy for coverage to extend.

Myth 11:  Comp claims (not-at-fault accidents) won’t raise my rates

Not necessarily.

Let’s say your driving history was spotless (no accidents or tickets) when you started with your insurance company. It’s a safe bet you were receiving a loss-free discount. Then last week you hit a deer. When your auto policy comes up for renewal next, it’s likely your loss-free discount will be removed.

Frequency of comp claims and not-at-fault accidents can also impact your premium. If you have multiple comp claims in a short period of time (1-3 years) there is a good chance it will increase your premium.

Myth 12:  Thieves prefer to steal newer cars instead of older cars

No, that’s not the case.

According to the National Insurance Crime Bureau, in 2015 the number one stolen car in the US was 1990’s Honda Accords. 52,244 to be exact. Honda Civic comes in second and Ford pickups come in third.

A majority of the time stolen autos are sent to chop shops and pieced out. Typically older vehicles are simpler for thieves.

Wrapping Up

We’re still not certain if bigfoot is real, but we know these 12 insurance topics are often questioned.

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Cheers!