Insurance Myths vs Facts: What You Really Need to Know

Tom Saue
Jul 1
2 min read

Hey everyone, it’s Tom Saue – one of the agents at Citizens Alliance Agency (CAA).

When it comes to insurance, misinformation spreads faster than a meme. Whether it's advice from a neighbor or something you saw online, it’s easy to fall for common myths that can cost you big. Let’s set the record straight by busting some of the most common insurance myths—and replacing them with facts you can count on.

Myth No. 1: “Red cars cost more to insure.”

Fact: Color doesn’t affect your premium. Insurance companies look at your car’s make, model, year, engine size, safety features, and claims history—not the paint job. Granted a red Corvette may cost more to insure than a gray minivan, but it's the car type and driving record that matter, not the color.

Myth No. 2: “Full coverage means everything is covered.”

Fact: Full coverage is a common insurance term. Typically, it refers to having both collision and comprehensive coverage, but not a blanket guarantee. Things like mechanical breakdowns or routine maintenance usually aren’t covered unless you have additional policies or warranties.

Myth No. 3: “I only need the state minimum auto insurance.”

Fact: While legal minimums keep you on the road, they often aren’t enough to cover actual damages in a serious accident. One major claim can leave you paying thousands out-of-pocket. Consider higher liability limits for better financial security.

Myth No. 4: “Life insurance is only for the elderly.”

Fact: Life insurance is cheaper and easier to get when you're younger and healthier. And it’s not just for covering funeral expenses—life insurance can replace income, pay off debts, and secure your family’s future.

Myth No. 5: “Homeowners insurance covers flooding.”

Fact: Standard homeowners insurance does not cover flood damage. If you live in a flood-prone area, you’ll need a separate flood insurance policy, which can be purchased through the National Flood Insurance Program (NFIP) or private insurers.

Myth No. 6: “My health insurance will cover all my medical costs.”

Fact: Health insurance helps, but it often comes with deductibles, co-pays, and coverage limits. Supplemental insurance—like critical illness or accident coverage—can help fill the gaps and provide cash when you need it most.

Myth No. 7: “Insurance is a waste of money if I never file a claim.”

Fact: Insurance is peace of mind. You don’t buy it hoping to use it—you buy it so that if disaster strikes, it won’t destroy you financially. Think of it as protection, not an investment.

The insurance world can feel like a maze of jargon and fine print, but separating myth from fact can save you money and heartache. If you ever have questions about your coverage, don’t rely on Google or gossip—talk to a licensed insurance professional (like me!) who can guide you with the facts that matter.