Common Insurance Myths – Busted

There is a lot of great information about insurance. However, there are also a lot of insurance myths. For example, many people think that they will have to pay more for insurance if they drive a red car. They may also think that their belongings are covered by their landlord’s insurance if they live in an apartment. That is why it is important to separate the fact from the fiction.

Myth: Your Insurance Will Increase if You Have a Red Car

Fact: This is one of the most common insurance myths. The color of your car does not have any effect on the amount of money that you will spend on car insurance. The safety features of your car as well as the make and model will determine how much money you will have to spend on insurance.

Myth: If You get Into an Accident While in a Rental Car, Then It Will be Covered By Insurance

Fact: Rental reimbursement will not automatically cover the accident. It is a form of insurance that you will have to purchase separately.

Myth: You Will Not Have to Make any More Car Payments if You Total Your Accident

Fact: The value of a car can depreciate quickly. In many cases, a car is worth less than what a person owes on the car. There is a type of insurance called loan/lease gap insurance. It will pay the balance of your vehicle if you total it, and it is worth less than what you owe on it.

Myth: Your Landlord’s Policy Will Cover Your Vehicle

Fact: Your landlord’s insurance will pay for damages that are done to the structure. You will have to get a renter’s insurance policy for your belongings.

Myth: The Market Value of Your Home is the Maximum Homeowners Insurance Coverage That You Need

Fact: The cost of rebuilding a home is usually more than the market value. You will not only need to consider the cost of your home, but you will also need to consider the cost of labor. You will also need to consider the cost of construction.

Myth: Floods are Typically Covered by Home Insurance

Fact: Floods are not covered by your home insurance policy. You are required to purchase a separate policy if you live in an area that is prone to floods. Even if your area is not prone to flooding, it is still a worthwhile investment.

Myth: You Will Get New Belongings if Your Old Ones are Destroyed

Replacement Cost Value and Actual Cash Value are not the same. If your belongings are damaged, then you will need Replacement Cost Value to get new ones. Actual Cash Value will cover what the belongings are actually worse.

Myth: The Stated Value of Your Scheduled Items is What You Will be Paid

Fact: If you have jewelry or other high-value item, then you may only be reimbursed up to what the current Replacement Cost Value is. The stated value is not a guaranteed amount.

Myth: Your Car Insurance Will Cover You the Entire Time You Work for a Ridesharing Service

Fact: There is a small gap between the time that your car insurance coverage ends and the ride sharing coverage begins. For example, you turn on your ridesharing app and are looking for passengers. You may not be insured until you get a passenger. Every ridesharing company has a different policy.

Myth: There is no Need for an Insurance Agent

Fact: An insurance agent can help you get the best plan for your needs and budget.