Use facts and data to make insurance decisions, not old wives’ales.
Don’t Navigate a Hurricane with a Folk Tale.
Making insurance decisions based on myths is like trying to navigate a ship through a hurricane using a story your grandpa told you about the wind. It’s charming, but it’s not a reliable tool. Insurance companies operate on cold, hard data—massive actuarial tables and complex risk algorithms. To protect yourself, you must use their tools against them. Look at the data in your policy contract, the company’s financial ratings, and the statistics of your own risk. Don’t let the folk tale of “red cars cost more” cause you to financially shipwreck in a real-world storm.
Stop thinking red cars cost more to insure. Do understand that the car’s make, model, and engine size are what matter instead.
The Insurance Company Is Colorblind; It Only Sees the Engine.
The myth that red cars are more expensive to insure is like believing a red house is more likely to catch fire. Insurance companies are completely colorblind; they have no idea what color your car is. They care about the car’s repair costs, its theft statistics, and its safety record. A red Ferrari is expensive to insure because it’s a high-performance machine that costs a fortune to fix, not because it’s red. A red minivan will be insured for the exact same price as a blue one.
Stop believing your credit score doesn’t affect your insurance rates. Do know that it’s one of the most significant rating factors instead.
Your Financial Report Card Is a Mirror of Your Risk.
This isn’t a myth; it’s a statistical fact that insurers don’t loudly advertise. They have mountains of data showing that how you manage your finances is a powerful predictor of how likely you are to file a claim. Think of it like a landlord renting an apartment. A person with a great credit history is seen as more responsible and more likely to take care of the property. To an insurer, a good credit score means you are a more responsible driver who is less likely to have an accident.
The #1 secret is that “full coverage” is a myth; it’s just a combination of liability, collision, and comprehensive.
There’s No “All-You-Can-Eat Buffet” on the Insurance Menu.
“Full coverage” is the biggest myth in the insurance world. It’s a slang term, not an actual policy. You can’t order it. It’s like asking for “all the food” at a restaurant. What you’re actually doing is ordering three separate items from the menu: Liability (to cover others), Collision (to cover your car if you hit something), and Comprehensive (to cover your car from things like theft or hail). Even with this “combo meal,” there are still things that aren’t covered, like rental cars or towing, unless you add them separately.
I’m just going to say it: The idea that you should “buy term and invest the difference” is dangerously oversimplified and not right for everyone.
A Garden Hose Is Not the Right Tool to Fill a Swimming Pool.
“Buy term and invest the difference” is a financial folk tale that sounds simple and smart. It’s like saying a garden hose is the only tool you ever need for water. It works great for a small garden (a middle-class portfolio). But if you’re trying to fill an Olympic-sized swimming pool (a high-net-worth estate), that “difference” you invest is constantly being drained by taxes. Permanent life insurance is the high-capacity, tax-efficient pipeline designed for the bigger job, offering benefits that a taxable investment account simply can’t match.
The reason your friend’s insurance is cheaper isn’t a mystery; it’s because you have different risk profiles, cars, and credit scores.
You and Your Friend Have Different Financial Fingerprints.
Comparing your insurance rate to your friend’s is like comparing your thumbprints and wondering why they don’t match. An insurance premium is a unique financial fingerprint, created from dozens of different data points. You might be the same age, but you drive different cars, live in different zip codes, have different credit scores, different driving histories, and different marital statuses. Each of these tiny differences changes the final calculation, creating a unique price that is specific to your individual risk profile.
If you’re still thinking your homeowners insurance covers floods, you’re going to lose everything in the next disaster.
Your Raincoat Is Not a Life Raft.
This is the most dangerous myth in property insurance. Your homeowners policy is like a very good raincoat. It’s designed to protect you from things that fall from the sky, like rain and wind. However, it provides absolutely zero protection when the water rises from the ground up in a flood. That’s a completely different disaster requiring a different tool—a life raft. Flood insurance is a separate, government-backed policy that you must buy to protect yourself from the catastrophic financial damage of a flood.
The biggest lie you’ve been told is that your insurance company is your friend or a “good neighbor.”
The Casino Owner Is Not Your Buddy at the Poker Table.
The friendly mascots and caring slogans are a multi-billion dollar marketing illusion. Your insurance company is not your friend. It is a for-profit business with a primary legal duty to its shareholders. In the poker game of an insurance claim, their goal is to lose as little money as possible. They are the casino. While they must play by the rules of the contract, their financial interests are in direct and permanent opposition to yours. You have a business relationship, not a friendship.
I wish I knew that my employer’s life insurance wasn’t enough to protect my family when I was starting out.
Don’t Build Your Family’s House on Rented Land.
Your employer’s life insurance feels like a great benefit, but it’s like building your family’s financial house on land you rent from your boss. The coverage is often only one or two times your salary, which is not enough to replace your income for decades. And worse, the moment you leave your job, the landlord takes the land back, and your family’s house disappears. An individual policy is the land you own yourself, a permanent foundation that you control, no matter where you work.
99% of people make this one mistake: they believe that if an accident is not their fault, their insurance rates won’t go up.
You Weren’t Punished, But You Lost Your “Perfect Attendance” Award.
This is a painful myth to bust. Even if an accident is 0% your fault, your rates can still go up. It’s because you lose your valuable “claims-free” discount. Think of it like a “perfect attendance” award at school. One day, the school bus gets in an accident (not your fault), and you have to miss a day. You weren’t punished, but you no longer have perfect attendance, so you lose the award. It’s a frustrating loophole that allows insurers to raise your rates even when you’re the victim.
This one small action of understanding your policy will bust more myths than reading a dozen online articles.
The Actual Rulebook Is Better Than a Blog Post About the Game.
There is a massive amount of conflicting information about insurance online. The only source of truth that matters is your own policy. It is the legal rulebook for the specific game you are playing with your specific company. Taking 30 minutes to read your “declarations page” and the “definitions” section will bust more myths than anything else. It will tell you your exact coverages, limits, and what words like “replacement cost” actually mean in your contract, not in a generic article.
Use permanent life insurance for permanent needs, not believing the myth that all your insurance needs will disappear in retirement.
The Myth of the Vanishing Financial Footprint.
The folk tale says you can cancel your life insurance in retirement because the kids are gone and the house is paid off. This myth ignores your permanent financial footprint. Do you want to leave a legacy for your family? Pay for final medical bills and funeral costs? Provide liquidity to pay estate taxes? Or replace the income lost from a pension when you die? These are permanent needs that do not vanish. Term insurance is for temporary problems; permanent insurance is for permanent promises.
Stop thinking that as a renter, your landlord’s policy covers your stuff. It doesn’t.
The Landlord Insured the Box, Not Your Things Inside It.
This is the foundational myth of renting. Your landlord’s insurance policy is designed to protect their asset: the building. It’s like insurance for a giant, empty cardboard box. If the building burns down, their policy pays to rebuild the box. It does absolutely nothing to replace your valuable life that you put inside that box—your laptop, your TV, your clothes, your furniture. You need your own renters insurance policy to protect your own belongings from being wiped out.
Stop believing that your personal auto policy covers you for business use. It doesn’t.
Your Personal Car Insurance Clocks Out When You Clock In for Work.
Your personal auto policy is like a pass to a recreational park; it’s designed for your personal life. The moment you use your car for a commercial purpose—whether you’re delivering pizzas, driving for Uber, or even just running a work-related errand—you have left the park. Your personal policy’s “business use exclusion” immediately kicks in, and your coverage becomes completely void. If you get into an accident while on the clock for your business, you are effectively driving with no insurance at all.
The #1 myth about whole life insurance is that it’s a “rip-off.” For the right person, it’s a powerful financial tool.
A Swiss Army Knife Is Not a “Rip-Off” Just Because It’s Not a Great Screwdriver.
Critics of whole life insurance love to call it a “rip-off” because it’s not the best pure investment. This is like calling a Swiss Army knife a rip-off because its screwdriver isn’t as good as a dedicated Phillips head. It’s missing the point. Whole life is a multi-tool. It’s designed to provide a death benefit, guaranteed cash value growth, tax advantages, and a source of liquidity all in one package. For someone who values those combined benefits, it’s not a rip-off; it’s a powerful and versatile financial instrument.
I’m just going to say it: “Accident forgiveness” isn’t free; you’re paying for it through a higher base premium.
The “Free” Breadsticks That Are Baked into the Price of Your Meal.
“Accident forgiveness” is a brilliant marketing invention, not an act of charity. It feels like a free pass, but it’s not. The insurance company knows, statistically, how many people will use that benefit. The cost of those future forgiven accidents is calculated and baked into the base premium of everyone who has that feature. It’s like a restaurant that offers “free” breadsticks. The cost of the flour and labor for those breadsticks is simply factored into the price of your main course.
The reason your rates are high isn’t because you filed a claim, but because you live in an area with high claim frequency.
You’re Paying for the Sins of Your Neighbors.
This is a frustrating reality of insurance. Your premium is based not just on your own driving record, but on the claims history of your entire zip code. It’s like being in a classroom where a few kids misbehave, and the entire class loses its pizza party. If you live in an area with a high rate of accidents, lawsuits, theft, or severe weather claims, the insurance company sees your address as a higher risk. You are paying a higher premium because of the statistical “sins” of your neighbors.
If you’re still believing that your health insurance covers you for travel abroad, you’re risking massive medical bills.
Your Health Insurance Needs a Passport to Work Overseas.
Your domestic health insurance policy is like a driver’s license that is only valid in your home country. The moment you travel abroad, its power is severely limited or completely non-existent. Most US-based plans offer zero coverage internationally, and those that do only cover extreme, life-threatening emergencies. A minor broken leg in Europe could leave you with tens of thousands of dollars in bills. You must purchase a separate travel medical insurance policy to act as the “passport” for your health while you are overseas.
The biggest lie is that an “act of God” is a valid insurance exclusion; the actual cause of loss (wind, hail, etc.) is what’s covered or excluded.
Insurance Doesn’t Believe in Theology; It Believes in Perils.
The term “act of God” is a movie myth, not an insurance term. Your policy does not contain this phrase. It covers specific, named “perils.” A tornado is not an uninsurable “act of God”; it is a “windstorm,” which is a covered peril. A flash flood is not an “act of God”; it is a “flood,” which is an excluded peril. Never accept a claim denial based on this vague, mythical term. The only thing that matters is whether the specific, physical cause of the damage is covered or excluded in your contract.
I wish I knew that I didn’t have to be a “millionaire” to need an umbrella policy.
The Insurance That Protects a Middle-Class Nest Egg.
The term “umbrella” makes it sound like a luxury item only for the ultra-rich. This is a dangerous myth. In today’s litigious world, a simple car accident can easily result in a lawsuit that exceeds the standard $300,000 of liability on your auto policy. If you have a house, a 401(k), and a savings account, you have a nest egg that is completely exposed. An umbrella policy is the affordable bodyguard for a middle-class family, providing a million dollars of extra protection for just a few hundred dollars a year.
99% of people believe this myth: that the police report determines fault for an insurance claim.
The Police Report Is an Opinion, Not a Verdict.
A police report is a very important piece of evidence, but it is not the final word. The officer’s opinion on who was at fault is just that—an expert opinion. The insurance companies will conduct their own investigation, and they will make their own determination of fault based on the specific laws of negligence in your state. While the police report carries a lot of weight and is often followed, the final, binding decision on who pays for what is made by the insurance adjusters, not the police officer.
This one small action of asking your agent “why” will help you debunk myths and understand your coverage.
The Question That Unlocks the Entire Story.
The simplest questions are often the most powerful. When your agent tells you something—”you need this coverage,” or “your rate went up”—your next word should always be “Why?” This simple, one-word question forces them to move past the sales pitch and into a real explanation. It makes them justify their recommendation and translate the complex jargon into a simple, real-world story. Asking “why” is the key that unlocks a true understanding of your policy and instantly busts any myths or half-truths.
Use an independent agent to bust the myth that one company is always the cheapest for everyone.
There Is No “King” of the Insurance Jungle.
The myth that one company—GEICO, State Farm, Progressive—is the undisputed cheapest option is a lie perpetuated by billions in advertising. There is no single king. Every company has a different appetite for risk and a different secret algorithm. Company A might have the best rates for a 40-year-old woman with a perfect record and a minivan, while Company B is the cheapest for a 22-year-old man with a sports car. An independent agent is the jungle guide who can take you to the specific corner of the forest where the cheapest option for you lives.
Stop thinking that a lower premium always means a better deal. It usually means less coverage.
The Cheap Parachute with the Smaller Canopy.
A lower premium almost always means you are buying a less effective product. It’s like being offered two parachutes—one for $500 and one for $300. The cheaper one might look like a better deal, but it probably has a smaller canopy, weaker stitching, and fewer safety features. That cheap insurance policy likely has higher deductibles, lower liability limits, or more exclusions. The bitterness of a denied or insufficient claim will last far longer than the sweetness of that small premium savings.
Stop believing that you only need life insurance if you have kids. You may still have debts and final expenses.
Your Financial Shadow Doesn’t Disappear Just Because You’re Single.
The myth is that life insurance is only for protecting children. But everyone, regardless of their family status, leaves behind a financial shadow. Do you have a mortgage that a co-signer would be stuck with? Do you have student loans that your parents would have to pay? Do you want to cover the costs of your own funeral and final medical bills so that your family doesn’t have to? Life insurance is the tool that provides the instant cash needed to clean up that financial shadow, leaving behind only fond memories.
The #1 myth about disability insurance is that it’s only for people in dangerous jobs; illness is a more common cause of disability than injury.
The Construction Worker vs. the Accountant.
We think of disability as a construction worker falling off a ladder. This is a myth. The reality is that the vast majority of long-term disabilities are caused by illnesses, not accidents. Cancer, heart disease, and mental health disorders do not care if you work at a desk or on a scaffold. An accountant’s ability to earn an income can be wiped out just as easily as a construction worker’s. Your biggest risk is not a sudden injury; it’s a slow, debilitating illness.
I’m just going to say it: The online quote you got in 5 minutes is a myth. The real price will come after underwriting.
The Teaser Rate vs. the Real Rate.
That super-fast, super-cheap online insurance quote is a marketing gimmick, not a real price. It’s the “teaser” rate designed to get you in the door. It’s based on the assumption that you are a perfect, flawless human with a perfect driving record and perfect credit. The real price only comes after the underwriting process, when they pull your official driving record, your claims history, and your credit-based insurance score. For most people, the final, real price will be higher than the initial, mythical quote.
The reason your claim was denied isn’t because the company is evil (though it might be), but likely because your policy specifically excluded that type of loss.
The Rulebook Said That Play Is Not Allowed.
While insurance companies can be difficult, most claim denials are not acts of pure evil. They are simply the adjuster reading the rulebook—your policy—which you both agreed to. If your basement floods and your policy has a clear, bold-faced exclusion for “damage caused by flood,” the denial is not a matter of opinion; it is a matter of contract law. The most common reason for a denial is that the specific “peril” that caused your damage was explicitly listed in the “Exclusions” section of the contract you signed.
If you’re still thinking you can cancel your claims-made policy without tail coverage, you’re mythically erasing all your past protection.
The Filing Cabinet of Your Past Work That You Just Threw Away.
A “claims-made” policy is like a filing cabinet that holds the protection for all your past professional work. It will only pay a claim if the cabinet is still open (the policy is active) when the claim is filed. The myth is that you can just cancel it when you retire. The moment you do that, you are throwing that entire filing cabinet into a dumpster. All the protection for every project you have ever done is gone. “Tail” coverage is the essential and expensive key that locks that cabinet and preserves it for years.
The biggest lie is that you can trust the other driver’s insurance company to treat you fairly.
You Are a Problem on Their Spreadsheet, Not a Person.
The other driver’s adjuster may call you and sound incredibly kind and helpful. This is a practiced illusion. You are not their customer; you are a liability on their spreadsheet that they need to close for the lowest possible cost. Their legal duty is to their own company’s shareholders. They are a trained negotiator whose job is to get you to accept a lowball offer or say something that hurts your case. You are in an adversarial relationship, not a friendly conversation.
I wish I knew the myth-busting truth about annuities: not all of them are high-fee, complex products.
Judging a Five-Star Restaurant by a Greasy Spoon Diner.
The myth that all annuities are bad is like eating at one terrible, greasy-spoon diner and then declaring that all restaurants are awful. You’re ignoring the entire world of fine dining. The annuity world has its “greasy spoons”—complex variable annuities with high fees. But it also has elegant, efficient “five-star” options. Simple, low-cost fixed annuities and immediate annuities are powerful tools that provide guarantees, safety, and tax advantages that solve retirement problems no other product can.
99% of people believe the myth that their health insurance will cover long-term custodial care.
The Surgeon vs. the Home Health Aide.
This is a devastatingly common and dangerous myth. Your health insurance, including Medicare, is designed to cover acute, skilled medical care. It is the brilliant surgeon who fixes your broken hip. However, it does not pay for the long-term “custodial” care that follows—the home health aide who helps you get dressed, the assisted living facility, or the nursing home. This is the care that can last for years and cost a fortune, and it is almost universally excluded from health insurance policies.
This one small action of reading your declarations page will bust the myth of what you think you have vs. what you actually have.
The Table of Contents for Your Financial Protection.
Your policy’s “declarations page” is the one-page table of contents at the very front of your insurance contract. It is the ultimate myth-buster. In simple terms, it lists your exact coverages, your specific limits, your chosen deductibles, and all the discounts that are being applied. Taking five minutes to read this one single page will instantly give you a clear, factual snapshot of the protection you are actually paying for, destroying any myths or assumptions you might have about your coverage.
Use a replacement cost policy to debunk the myth that insurance will pay for a brand new version of your 10-year-old TV. (It will if you have the right coverage).
The “Used TV” vs. the “New TV” Insurance.
The myth that insurance won’t pay for a new TV is only half true. It depends on the tool you bought. “Actual Cash Value” (ACV) coverage is the “used TV” tool. It pays you what your 10-year-old TV was worth, which is next to nothing. “Replacement Cost” (RC) coverage is the myth-busting, “new TV” tool. It gives you the full amount of money needed to go to the store and buy a brand-new, modern equivalent of your old TV. It’s a choice you make when you buy the policy.
Stop believing the myth that your car insurance covers personal items stolen from your car. Your homeowners or renters policy does.
The Two Different Toolboxes for Your Property.
This myth confuses two different types of insurance. Your auto insurance policy is a specialized toolbox designed to fix your car. It does not cover the other things you put inside the car, like your laptop or your golf clubs. Your homeowners or renters policy is the toolbox designed to protect your personal belongings, no matter where they are in the world. So, if someone breaks into your car and steals your stuff, it is your homeowners policy, not your auto policy, that will respond to the claim.
Stop thinking that your insurance will pay off your car loan if it’s totaled. It only pays the actual cash value, which is why gap insurance exists.
The Car’s Value vs. Your Loan’s Value.
This is a brutal myth-bust. Your insurance policy promises to pay you one thing: the “actual cash value” of your car a second before it was totaled. It makes no promise to pay off your loan. Because a new car depreciates so quickly, the amount you owe the bank is often thousands of dollars more than what the car is actually worth. This “gap” is your responsibility. “Gap insurance” is the specific tool designed to fill this financial hole and pay the difference to the bank.
The #1 myth is that your loyalty to an insurance company will be rewarded with lower rates. The opposite is often true (it’s called price optimization).
The “Loyalty Tax” You Pay for Not Shopping Around.
The myth of a loyalty discount is a marketing fairy tale. The reality is often a “loyalty penalty.” Insurance companies use a practice called “price optimization,” where their algorithm identifies the loyal, long-term customers who are least likely to shop around. They then slowly and steadily increase the rates on these “sticky” customers. The company that gave you the best rate five years ago is rarely the one with the best rate today. Shopping your insurance every year is the only way to bust this myth.
I’m just going to say it: The myth of the “quick and easy” claims process is the industry’s best piece of fiction.
The 30-Second Commercial vs. the 6-Month Reality Show.
The insurance industry spends billions of dollars to promote the myth of a “one-tap” claims process. This is pure fiction. A real, significant claim is not a 30-second commercial; it’s a long, grueling reality show. It involves adjusters, estimates, contractors, paperwork, and endless, frustrating phone calls. It is a slow, difficult, and adversarial process. Believing the myth will only lead to shock and frustration when you are confronted with the gritty, slow-moving reality of a real claim.
The reason you can’t just “invest the difference” is that the myth ignores the tax-free growth, tax-free loans, and guaranteed death benefit of permanent life insurance.
The Simple Story That Leaves Out the Most Important Chapters.
“Buy term and invest the difference” is a simple, catchy myth that conveniently ignores three crucial chapters of the story. First, the “investment” grows in a taxable environment, creating a constant drag on your returns. Second, when you take money out, it’s a taxable event. Third, it is not guaranteed and can lose value. Permanent life insurance provides what the myth cannot: tax-free growth, tax-free distributions via loans, and a guaranteed, tax-free death benefit that is uncorrelated with the stock market. It’s a completely different kind of story.
If you’re still believing the myth that you’re too young to need life insurance, you’re missing out on the cheapest premiums of your life.
Buying Your Financial House at Today’s Rock-Bottom Prices.
The myth is that you only need life insurance when you’re “old.” The reality is that your age and your health are the two primary ingredients in the price. Buying a policy when you are young and healthy is like buying a house in a brand-new development before the prices skyrocket. You are locking in the lowest possible “mortgage payment” (your premium) for the rest of your life. Every year you wait, the price of that same house is guaranteed to go up, and you risk a health issue appearing that makes you unable to buy it at all.
The biggest lie is that you can get insurance for a risk that has already happened.
You Can’t Buy Fire Insurance for a Burning House.
This is the foundational principle of all insurance. It is a tool to protect against a future, uncertain risk. You cannot transfer a risk to an insurance company that has already occurred. This is like trying to buy fire insurance while your house is already on fire, or trying to buy auto insurance after you’ve already had the accident. The moment the event happens, the opportunity to insure against it is gone forever. Insurance is about planning for what might happen, not reacting to what already has.
I wish I knew the myth that my homeowners policy would cover my home-based business was false.
Your Kitchen Is Not Insured as a Commercial Restaurant.
The myth is that your personal homeowners policy extends to your professional life. The reality is that your policy has a strict “business exclusion.” It is designed to cover your personal belongings, not your professional inventory. It covers a guest slipping on a toy, not a client slipping on a wet floor. If you are running a business from your home, you are operating a commercial enterprise inside a personally insured building. You need a separate business endorsement or policy to cover that risk.
99% of people believe the myth that they can’t get life insurance if they have a health condition.
The Locksmith Who Can Find a Key for Almost Any Door.
The myth is that a health condition like diabetes or a past heart attack makes you “uninsurable.” This is like finding one locked door and assuming the entire building is inaccessible. The reality is that there are dozens of different insurance companies, and each one is a different “door” with a different “key.” An independent broker is the master locksmith who knows which companies specialize in which conditions. While not every door can be opened, a specialist can almost always find a key that will work.
This one small action of asking for a policy specimen will debunk any myths the salesperson is telling you.
Ask to See the Actual Rulebook, Not Just the Marketing Brochure.
A slick sales illustration or a verbal promise from an agent is a marketing brochure. It tells a beautiful story. A “policy specimen” is the actual, boring, legally-binding rulebook. Before you buy, ask the agent to send you a blank copy of the actual policy contract you would be signing. This is the ultimate myth-buster. It allows you to read the real definitions and exclusions for yourself, ensuring that the story you were told in the brochure matches the fine print in the actual rulebook.
Use your common sense to bust the myth that an insurance deal that sounds too good to be true probably is.
If It Quacks Like a Duck…
The insurance industry is built on the law of large numbers and complex actuarial science. There are no magical loopholes or secret, super-cheap policies. If you get a quote that is dramatically and almost unbelievably cheaper than every other quote you’ve received, your common sense should be screaming. It’s not a secret deal; it’s a sign that the policy is likely missing crucial coverages, has a terrible claims reputation, or is being sold by a less-than-reputable company. The oldest myth of all is that a free lunch exists.
Stop believing the myth that a government backstop (like the NFIP for floods or state plans for wind) provides broad coverage. They are often very limited.
The Government’s Leaky Life Raft vs. a Private Yacht.
When the private market won’t cover a risk, the government sometimes steps in with a “plan of last resort.” The myth is that these plans are just as good as private insurance. They are not. A government plan, like the National Flood Insurance Program, is a leaky, one-size-fits-all life raft. It has lower limits, stricter rules, and much narrower coverage than a well-designed private policy. It is a basic survival tool, not the comprehensive, comfortable protection you would get in the open market.
Stop thinking that all insurance agents are the same. Captive, independent, and broker are all different models.
The Nike Salesman, the Personal Shopper, and the Client’s Lawyer.
The myth is that an “agent is an agent.” This is not true. A captive agent is the Nike salesman; they can only sell you the products of one company. An independent agent is the personal shopper; they can bring you options from many different companies. A broker is a step further; they have a legal fiduciary duty to act in your best interest, like your lawyer. Understanding which type of professional you are working with is critical to understanding their loyalties and the scope of the advice they can provide.
The #1 myth is that Social Security Disability is a reliable safety net. The denials are frequent and the process is grueling.
A Safety Net Made of Cobwebs.
The myth is that if you get sick, the government will be there with a reliable Social Security Disability check. The reality is that this “safety net” is incredibly difficult to fall into. The definition of disability is brutally strict—you must be unable to do any job, not just your own. Over 60% of initial applications are denied, and the appeals process can take years. It is a grueling, soul-crushing system of last resort, not a dependable plan to replace a professional’s income.
I’m just going to say it: The myth that you can handle a serious injury claim without a lawyer is a story promoted by insurance companies.
The Insurance Company’s Favorite Fairy Tale.
The insurance industry spends a lot of time and money promoting the fairy tale that you don’t need a lawyer for your injury claim. This is a self-serving myth. They know that, on average, claimants who are represented by an attorney receive significantly higher settlements than those who are not. They want to negotiate with you, an amateur, not with a seasoned professional who knows all their tactics and understands the true value of your claim. Believing this myth is the fastest way to leave a massive amount of money on the table.
The reason that myth about not needing uninsured motorist coverage persists is that people trust other drivers to be responsible. That’s a mistake.
You’re Insuring Yourself Against the Irresponsible Masses.
The myth that you don’t need Uninsured Motorist (UM) coverage is based on the dangerously optimistic belief that every other driver on the road has followed the law and bought good insurance. The data says this is a fantasy. Roughly one in eight drivers on the road has no insurance at all. UM coverage is not about trusting others; it is about protecting yourself from the statistical certainty that you will encounter someone who is irresponsible. It’s the insurance you buy for yourself when the other guy breaks the rules.
If you’re still believing the myth that your homeowners insurance covers mold, you’re in for a rude awakening.
The Uninvited Guest That Your Policy Refuses to Pay For.
The myth is that if you have a water leak, the resulting mold is part of the same claim. The reality is that mold is the uninvited, destructive houseguest that your policy specifically excludes. Most homeowners policies have an absolute exclusion for mold, or they cap the coverage at a very low amount. They view it as a secondary, preventable problem, not part of the initial water loss. You must read your policy carefully; you are likely completely uninsured for a major mold remediation project.
The biggest lie is that your insurance company will tell you about every discount you’re entitled to. You have to ask.
The Restaurant That Doesn’t Tell You About the Daily Specials.
Believing your insurer will proactively give you every discount is like going to a restaurant and expecting the waiter to volunteer that you could have gotten a cheaper lunch special. It’s not going to happen. It is not in their financial interest to lower your bill. While some discounts are applied automatically, many others—for specific safety features, professional associations, or a good student discount—will only be applied if you know about them and ask for them. You have to be your own “coupon hunter.”
I wish I knew that the myth of “set it and forget it” insurance was costing me money every year.
The Financial Autopilot That Is Flying You into a More Expensive Cloud.
The myth is that you can buy an insurance policy and just let it renew automatically every year. This “set it and forget it” approach is a costly mistake. Your life changes, the insurance market changes, and your current company’s rates change. That great deal you got three years ago is likely no longer competitive. An annual review and a periodic shopping of your policies is the only way to ensure your financial autopilot isn’t slowly and silently steering you into a much more expensive flight path.
99% of drivers believe the myth that letting a friend borrow their car means the friend’s insurance is primary. It’s your insurance that pays.
The Insurance Is Glued to the Car, Not the Driver.
This is the most misunderstood rule of the road. The myth is that if your friend crashes your car, their insurance will handle it. The reality is that in almost every state, the insurance is attached to the vehicle. When you hand your keys to your friend, you are also handing them your insurance policy. If they cause an accident, it is your insurance that will have to respond first, it is your policy that will have a claim on its record, and it is your rates that are likely to go up.
This one small action of googling “top insurance myths” will save you from making costly mistakes.
The Five-Minute Investment with a Lifelong Return.
The world of insurance is filled with decades of accumulated folklore and bad advice. The single easiest and most powerful action you can take to protect yourself is to simply open your web browser and search for “common insurance myths.” In five minutes of reading from reputable sources, you can arm yourself with the basic knowledge needed to avoid the most common and costly mistakes that millions of people make every year. It is a tiny investment of time that can save you thousands of dollars and immense frustration.
Use facts to debunk the myth that you can’t switch insurance companies mid-term. You can, and you’ll get a pro-rated refund.
Your Insurance Policy Is Not a Prison Sentence.
The myth is that once you’ve paid for a six-month or one-year policy, you are locked in until the end of the term. This is completely false. An insurance policy is a contract that you have the right to cancel at any time, for any reason. If you find a better deal elsewhere, you can switch today. Your old insurance company is legally required to send you a pro-rated refund for the unused portion of your premium. You are a customer, not a prisoner.
Stop believing the myth that your insurance covers normal wear and tear or maintenance issues.
Your Policy Is a Warranty Against Disasters, Not a Service Plan.
The myth is that insurance is there to fix things that break in your house. The reality is that your policy is not a home warranty or a maintenance plan. It does not cover your 20-year-old roof that’s worn out, your furnace that dies of old age, or your peeling paint. Insurance is designed to cover sudden, accidental, and unexpected events, like a fire or a windstorm. The slow, predictable decay of your property from normal use is a maintenance issue that is your responsibility as the owner.
Stop thinking that a verbal promise from your agent is binding. If it’s not in the written policy, it doesn’t exist.
A Conversation Is Not a Contract.
This is a brutal but critical legal truth. A verbal promise from your agent that “you’re covered” is worth absolutely nothing. The only thing that matters is the written language in the physical insurance contract. The policy is a legally binding document; a conversation is just a conversation. If a claim occurs and the policy language excludes it, that verbal promise will evaporate into thin air, and the written contract will be the only thing the insurance company—and the courts—will look at.
The #1 myth about umbrella insurance is that it’s only for the rich. It’s affordable protection for the middle class.
The Million-Dollar Bodyguard for a Middle-Class Family.
The myth is that umbrella insurance is a luxury item for millionaires. The reality is that it is a fundamental necessity for the modern middle class. In a world where a simple car accident can lead to a million-dollar lawsuit, the standard liability limits on your home and auto policies are no longer enough. An umbrella policy provides that crucial million dollars of extra protection, and the secret is that it’s incredibly cheap—often just a dollar a day—to hire that financial bodyguard to protect your home and your savings.
I’m just going to say it: The myth that your insurance company has your best interests at heart is the most dangerous one of all.
They Are a Business, Not a Charity.
This is the foundational myth that underpins all other misunderstandings. Every commercial, every slogan, and every friendly agent is designed to make you believe that you and your insurer are on the same team. You are not. They are a for-profit business with a legal duty to their shareholders. That duty requires them to minimize their claim payouts. While they must act in good faith, their financial interests are fundamentally opposed to yours. Believing this myth is like a sheep trusting the kindness of a wolf.
The reason the myth of “no-fault” insurance being simpler persists is that people don’t understand it still involves determining who was at fault for rate purposes.
“No-Fault” Is for Your Medical Bills, Not for Your Driving Record.
The myth of “no-fault” auto insurance is that it means no one is ever blamed for an accident. That’s not how it works. The “no-fault” part simply means that for minor injuries, your own insurance company pays for your medical bills, regardless of who caused the accident. This is to avoid small lawsuits. However, the insurance companies will absolutely still determine who was at fault behind the scenes. The at-fault driver will still see a claim on their record and a likely rate increase at their next renewal.
If you’re still believing the myth that you should always choose the lowest deductible, you haven’t done the math on premium savings.
The Small Bet That Costs You a Fortune to Make.
The myth is that a low deductible is “safer.” The reality is that it’s often a terrible financial trade. A low deductible is a small, “safe” bet you’re making, and the casino (the insurer) charges you a very high price to place that bet. By raising your deductible from $500 to $1,000, you are making a bigger bet on yourself. The premium savings for making this bigger bet are often so large that you will save more in just two or three years than the extra risk you are taking on.
The biggest lie is that a life insurance medical exam is something to be feared. It’s a free health check-up.
The “Test” That Gives You a Free Copy of the Answers.
The myth is that the life insurance medical exam is a scary, invasive test designed to find something wrong with you. The reality is that it is a free, convenient, and comprehensive health screening that you should take advantage of. A nurse comes to your home and gives you a mini-physical, including blood work and other vital checks. You can get a copy of these results for free, giving you a valuable snapshot of your current health that you can share with your own doctor. It’s a benefit, not a burden.
I wish I knew that the myth of a “standard” insurance policy was false. Every company’s contract is different.
No Two Blueprints Are Exactly Alike.
The myth is that a “homeowners policy” or an “auto policy” is a standard, commodity product, like a gallon of milk. This is completely false. Every single insurance company uses its own, unique legal contract. While they are often based on similar templates, the specific definitions, exclusions, and endorsements are different in every single one. This is why you cannot just compare on price; you are comparing two completely different legal blueprints. The differences in the fine print can mean the difference between a paid claim and a denial.
99% of people believe the myth that their rates won’t go up if they don’t file a claim, ignoring all the other factors that can cause increases.
You Played a Perfect Game, But You’re Still in a Losing League.
The myth is that if you are a perfect driver and never file a claim, your rates should only go down. This ignores the fact that you are just one player on a massive team—your entire state or region. If the insurance company’s losses in your state have gone up due to more accidents, bigger lawsuits, or severe weather, they will file for a rate increase for everyone, regardless of their individual record. You might be a great player, but the cost to keep the entire league running has gone up.
This one small action of asking an agent to explain a policy exclusion will bust the myth that “everything is covered.”
The Question That Reveals the Fence Around Your Coverage.
The myth sold in commercials is that your policy is a magical forcefield that covers everything. The reality is that your policy is a carefully defined piece of property with a very specific fence built around it. The “Exclusions” section is the part of the contract that describes that fence. The simple action of picking one exclusion—like the one for floods—and asking your agent to explain it to you in simple terms will instantly reveal the truth. It will show you that there are, in fact, huge risks that your policy is not designed to cover.
Use your own research to debunk the myth that a specific company is the “best.” The best insurer is the one that’s right for you.
There Is No “Best Car”; There Is Only the Best Car for Your Needs.
The myth, promoted by endless advertising, is that there is one single “best” insurance company. This is like saying there is one single “best” car. A Ford F-150 might be the best vehicle for a contractor, while a Toyota Prius is the best for a city commuter. The “best” insurance company is the one whose specific appetite for risk, coverage options, and pricing algorithm is the best fit for your unique financial fingerprint. You must do your own research to find the company that sees you as their ideal, low-risk customer.
Stop believing the myth that you need to be debt-free to not need life insurance. You might still want to leave a legacy.
Replacing Your Paycheck vs. Creating a Gift.
The myth is that life insurance is only for paying off debt and replacing income. This is its first job, but it is not its only job. Once you have accumulated wealth, the role of life insurance transforms. It is no longer just a shield; it is a powerful tool for legacy creation. A life insurance policy is the most efficient and powerful way to transfer a guaranteed, tax-free inheritance to your children, your grandchildren, or your favorite charity, creating a lasting impact that goes far beyond just paying the bills.
Stop thinking your homeowners policy covers your high-value jewelry. The sub-limits for theft are mythically low.
The Fine Print That Puts a Cap on Your Bling.
The myth is that if you have $300,000 of personal property coverage, your $20,000 engagement ring is covered. This is dangerously false. Buried in the fine print of your policy is a “sub-limit” for the theft of jewelry, which is often as low as $1,500. This means that no matter how much coverage you have in total, the most the company will pay for your stolen ring is $1,500. To truly protect it, you must “schedule” it separately on your policy.
The #1 myth is that the insurance company’s first offer is their best offer. It’s just a starting point for negotiation.
The Opening Bid in the Auction for Your Claim.
This is the foundational myth of the claims process. The first offer the adjuster gives you is not a final, take-it-or-leave-it number. It is the opening bid in a negotiation. It is almost always the lowest possible amount they think you might be willing to accept. Accepting it without question is the single most expensive mistake a claimant can make. The real settlement is only discovered after a process of documentation, counter-offers, and professional, fact-based negotiation.
I’m just going to say it: The myth of the friendly, local agent who knows everyone in town is a relic from a bygone era for most people.
The Norman Rockwell Painting vs. the Modern Call Center.
The image of the friendly, small-town insurance agent who knows your family and coaches the Little League team is a powerful, Norman Rockwell-esque myth. For some people, this is still a reality. But for the vast majority of consumers who buy from large, national carriers, their “agent” is a licensed salesperson in a massive call center thousands of miles away. You will likely never speak to the same person twice. The myth is a beautiful piece of nostalgia, but the reality is often much more impersonal.
The reason the myth about “bundling always saves you money” exists is because of massive advertising budgets. It’s not always true.
The “Combo Meal” Isn’t Always the Best Deal.
The “bundle and save” myth is one of the most successful advertising campaigns of all time. The discount is real, but it is not always the best deal. It’s like a fast-food combo meal. It’s convenient, but you can often save more money by buying your burger from the place with the best burger prices and your fries from the place with the best fry prices. The savings from putting your home and auto with the two separate, cheapest carriers can often be greater than the modest discount you get for bundling them.
If you’re still believing the myth that your health insurance will cover elective cosmetic surgery, you’re going to be paying that bill yourself.
The “Medically Necessary” Litmus Test.
The myth is that if a doctor performs a procedure, your health insurance will pay for it. The reality is that your policy will only pay for procedures that are “medically necessary” to treat an illness or injury. Elective cosmetic surgery—a nose job, a facelift, a tummy tuck—is done for aesthetic reasons, not medical ones. It will be universally denied by your health insurance company, leaving you to pay 100% of that very large bill out of your own pocket.
The biggest lie is that you should cancel your life insurance policy as soon as your kids are grown.
The Financial Fire Station for Your Final Years.
The myth is that once the mortgage is paid and the kids are educated, your need for life insurance is over. This is like a town deciding to tear down its fire station because all the buildings are now old. The risks in your later years don’t disappear; they just change. A permanent life insurance policy is the financial fire station that stands ready with a pool of tax-free cash to handle the emergencies of your retirement—paying for estate taxes, supplementing a surviving spouse’s income, or leaving a legacy to your grandchildren.
I wish I knew that the myth of getting a cheaper rate by listing my gender as male (or female) is based on actuarial data, but it’s becoming less common.
The Statistical Battle of the Sexes.
The fact that gender affects insurance rates is not a myth, but the reason is often misunderstood. It is based on cold, hard actuarial data. Historically, women have a longer life expectancy than men, which is why they pay less for life insurance. Young men, statistically, get into more and worse car accidents than young women, which is why they pay more for auto insurance. This is not sexism; it is statistics. However, many states are now banning this practice, making this a slowly dying piece of insurance mythology.
99% of people believe the myth that their insurance covers them if they’re injured while committing a crime.
The “Get Out of Jail Free” Card That Does Not Exist.
This myth pops up in a surprising number of conversations. The reality is that every single insurance policy contains a clear and unambiguous “criminal acts” exclusion. If you are injured while in the process of committing a felony, your health, disability, and life insurance policies will not pay. Insurance is a tool to protect against the unforeseen accidents of life, not to finance the consequences of your intentional, illegal actions. Your policy is a contract for law-abiding citizens.
This one small action of checking your state’s minimum liability limits will bust the myth that they provide adequate protection.
The Legal Minimum Is a Financial Failure.
The myth is that if you buy the legally required amount of auto insurance, you are “fully covered.” This is a dangerous lie. Take one minute to google your state’s minimum liability limits. You will be shocked to see that they are often as low as $25,000 per person. In a world where a serious car accident can easily lead to a million-dollar lawsuit, the state minimum is not a safety net; it is a financial death trap. It is the legal bare minimum, not a recommendation for responsible protection.
Use a dashcam to debunk the other driver’s mythical account of what happened in an accident.
The Unblinking Witness vs. the Lying Human.
The myth is that after an accident, the other driver will tell the truth. The reality is that when thousands of dollars are on the line, people’s memories become very creative. A dashcam is the ultimate myth-buster. It is the silent, unbiased, and unblinking witness that records the absolute truth. The clear, undeniable video evidence of the other driver running the red light or swerving into your lane instantly destroys their mythical version of events and proves your case beyond any doubt.
Stop believing the myth that your renters insurance is too expensive. It’s often as cheap as a couple of cups of coffee per month.
The Myth of the Unaffordable Financial Life Raft.
The biggest myth that prevents renters from getting protected is the idea that it is expensive. The reality is that renters insurance is one of the biggest bargains in the entire financial world. A policy that provides tens of thousands of dollars in property coverage and hundreds of thousands in liability protection often costs less than $20 a month. For the price of a few lattes, you can buy a powerful financial life raft that can save you from a catastrophic, life-altering loss.
Stop thinking your policy covers damage from termites, rodents, or other pests. That’s a myth; it’s considered a maintenance issue.
The Slow Invasion vs. the Sudden Storm.
The myth is that if your house is damaged, it’s covered. The reality is that insurance is for sudden and accidental events. A termite or rodent infestation is a slow, gradual invasion that could have been prevented through proper home maintenance. Just like rust or rot, damage from pests is a universal exclusion in homeowners policies. The policy is designed to protect you from a sudden storm, not a slow, silent siege that is your responsibility to prevent.
The #1 myth is that you can’t have too much liability insurance.
The Point of Diminishing Returns on Your Financial Fortress.
The myth is that more is always better. The reality is that you can have too much of a good thing. You should have enough liability insurance to fully cover your net worth and a portion of your future income. An umbrella policy is crucial. But a middle-class family with a $500,000 net worth does not need a $10 million umbrella policy. Buying a massive, unnecessary amount of coverage is an inefficient use of your premium dollars, which could be better used to shore up other parts of your financial fortress.
I’m just going to say it: The myth that you can trust your insurance company is perpetuated by the billions they spend on advertising.
They Are Buying Your Trust, Not Earning It.
The entire insurance advertising industry is built on one goal: to create and perpetuate the myth that these massive, for-profit corporations are your friends. The catchy jingles, the funny mascots, and the heartwarming slogans are all part of a multi-billion dollar campaign to make you feel a sense of trust and loyalty. But in a claim, this advertising is meaningless. The only thing that matters is the cold, hard language of the contract. They are buying your trust because their business model depends on it.
The reason the myth about life insurance being a bad investment won’t die is that people compare it to the S&P 500, ignoring its unique tax and safety features.
Comparing a Battleship to a Race Car.
The myth that life insurance is a “bad investment” comes from a flawed comparison. It’s like comparing a battleship to a race car and complaining that the battleship is too slow. The S&P 500 is the race car, designed for pure, high-risk growth. A whole life policy is the battleship, designed for safety, stability, guarantees, and tax advantages. It’s not trying to win the race. It’s designed to survive the battle, providing a combination of benefits that the race car can never offer.
If you’re still believing the myth that your homeowners policy covers your car while it’s in the garage, you’re wrong.
The Two Separate Garages of Insurance.
The myth is that everything on your property is covered by your property insurance. The reality is that your home and your car are two completely separate types of risk that live in two different insurance “garages.” Your homeowners policy contains a clear and absolute exclusion for any damage to your registered motor vehicles, no matter where they are parked. A fire in your garage that destroys both your house and your car will require two separate claims with two separate policies.
The biggest lie is that an insurance policy is a simple product. It’s a complex legal contract.
The Friendly Brochure vs. the 70-Page Legal Document.
The myth is that insurance is a simple promise you buy. The lie is perpetuated by simple quotes and easy-to-read marketing brochures. The reality is that the policy you receive is a dense, complex, and often confusing legal contract of adhesion. It is written by an army of lawyers and is filled with specific definitions, conditions, and exclusions that have been tested in court for decades. Believing it is simple is the first step to being surprised and disappointed when you have a claim.
I wish I knew that the myth of “if it’s not my fault, the other guy pays” is complicated by uninsured drivers and lengthy legal battles.
The Simple Justice vs. the Complicated Reality.
The myth is that justice in an auto accident is simple and swift. The reality is that the other driver might be one of the 1-in-8 people who has no insurance at all, leaving you to rely on your own policy. Or, they might lie about what happened, forcing your insurance company into a long, expensive legal battle to prove their fault. The simple, playground logic of “he started it” often dissolves in the complex, messy, and frustrating reality of the legal and insurance systems.
99% of people believe the myth that they have 30 days to add a new car to their policy. The timeline varies and can be much shorter.
The Grace Period That Isn’t So Graceful.
This is a critically dangerous myth. Most auto policies provide a “grace period” of automatic coverage for a newly purchased vehicle, but the length of that period is not standard. Many people believe it’s always 30 days. The reality is that it can be 14 days, 7 days, or even as short as 4 days, depending on your company and your state. And the coverage is often limited. Assuming you have a month is a gamble that can lead to you being in an accident with a brand-new, completely uninsured car.
This one small action of reading the definition of “replacement cost” in your policy will bust the myth of how it’s calculated.
The “New for Old” Promise with a Catch.
The myth of “replacement cost” is that if your old roof is destroyed, you just get a check for a new one. The reality, revealed in the policy’s definitions, is a two-step process. First, they will write you a check for the “Actual Cash Value”—the value of your old, depreciated roof. They then hold back the rest of the money. Only after you have actually replaced the roof and sent them the bill will they release the remaining funds. This one definition reveals the “trust but verify” nature of the claims process.
Use your knowledge to debunk the myth that you should never volunteer information to an adjuster. You have a duty to cooperate under the policy.
The Fine Line Between Cooperation and Confession.
The myth that you should be completely silent with an adjuster is a half-truth. The reality is that your policy requires you to cooperate with your own insurer’s investigation. You must provide them with the facts and documents they need. However, this duty to cooperate does not extend to the other driver’s insurance company. And it does not mean you should volunteer opinions, speculate, or admit fault. It’s a delicate balance: provide the facts as required by the contract, but do not offer a confession.
Stop believing the myth that you can just tell your agent to “give me the same coverage I had before.” Your needs may have changed.
The Autopilot Setting for a Completely Different Flight.
The myth is that “the same” is a safe bet. But your life is not “the same” as it was last year. You got a raise, you bought a new car, you accumulated more assets. Asking for “the same coverage” is like a pilot taking off on a completely new flight path but using the autopilot settings from his previous flight. It’s a lazy shortcut that is guaranteed to lead you off course. A proper insurance renewal requires a fresh look at your new circumstances to ensure the protection matches your current reality.
Stop thinking that a CLUE report is a myth. It’s a real database that tracks all your property claims history.
The “Credit Report” for Your Insurance Life.
The CLUE report is not a myth; it is the powerful and very real credit report of the insurance world. Every single property claim you have ever filed, or even just called to ask a question about, is recorded in this database for up to seven years. Every insurance company in the country has access to it when you apply for a policy. It is the official, permanent record of your claims history, and it has a massive impact on the rates you will be offered.
The #1 myth is that insurance is a scam. It’s a regulated system of risk transfer that makes modern commerce possible.
The Foundation of the Skyscraper You Don’t See.
The myth that insurance is a “scam” is like looking at a giant skyscraper and not understanding the massive, invisible foundation that is holding it up. No bank would ever lend money to build that skyscraper without insurance. No contractor would ever work on it. No business would ever lease a space inside it. The principle of insurance—the transfer of a catastrophic risk for a small, predictable fee—is the fundamental bedrock that allows our entire modern economy to function and take the risks necessary for growth.
I’m just going to say it: The myth that you’ll get a check for the full policy limit immediately after a loss is pure fantasy.
Your Policy Limit Is a Ceiling, Not a Floor.
The myth is that if your house, insured for $500,000, burns down, you get a check for $500,000. This is a complete fantasy. The policy promises to pay the lesser of the policy limit or the actual cost to repair or replace the damage. The policy limit is the absolute maximum ceiling on what they will ever pay, it is not a guaranteed floor. You will have to go through a long, detailed, and often painful process to document your loss and prove the actual cost of your damages.
The reason the myth that “I’m a safe driver, I don’t need good insurance” is so dangerous is that you can’t control the actions of other drivers.
You’re a Great Boxer, But You’re in a Royal Rumble.
Being a safe driver is like being a skilled, defensive boxer. You can protect yourself from most punches. But the road is not a one-on-one match; it’s a chaotic, 30-person royal rumble. You can be the best boxer in the world, but you can’t stop yourself from being hit from behind by a drunk driver or a distracted texter. Good insurance, especially high liability limits and uninsured motorist coverage, is the protection you need for the punches you will never see coming.
If you’re still believing the myth that you should store your home inventory list in your house, you’re going to lose it in the fire.
Don’t Store the Key to the Safe Inside the Safe.
The myth is that you should keep all your important papers in a neat file at home. The reality is that storing your home inventory list—the crucial document you will need after a fire—in the very house that is going to burn down is a tragically flawed strategy. It’s like locking the key to a safe inside the safe itself. Your inventory, whether it’s a video or a spreadsheet, must be stored in a separate, safe location, like a cloud storage service or a safe deposit box.
The biggest lie is that insurance pays for preventative maintenance.
The Policy Is for the Accident, Not the Oil Change.
The myth is that insurance is there to fix things on your property. The biggest lie within that is the idea that it covers maintenance. Insurance is designed to pay for the sudden, accidental, and unforeseen. The slow, predictable, and necessary act of maintaining your property—getting your oil changed, fixing a leaky faucet, replacing a worn-out roof—is your responsibility as an owner. In fact, failing to perform this maintenance can often be a reason for an insurer to deny a future claim.
I wish I knew that the myth of a “lifetime guarantee” from a body shop is only as good as the shop itself, not the insurance company.
The “Guarantee” from a Business That Might Not Exist in Five Years.
The myth is that the “lifetime guarantee” offered by your insurer’s preferred body shop is a promise from the multi-billion dollar insurance company. It is not. It is a promise from the local, independently-owned body shop. If that shop goes out of business in five years and your paint starts to peel, your lifetime guarantee is a worthless piece of paper. The insurance company has no further obligation. The guarantee is only as strong and as lasting as the small business that provided it.
99% of people believe the myth that they are automatically covered for a rental car after an accident. It’s an optional coverage.
The Loaner Car Is Not a Standard Feature.
This is a painfully common myth. The reality is that rental reimbursement is an optional, add-on coverage, like heated seats in a car. It is not a standard feature. If you didn’t specifically check the box and pay the extra few dollars a month for this rider when you bought your policy, you will be paying for that rental car out of your own pocket after an accident. It is a classic example of assuming you have coverage that you never actually purchased.
This one small action of looking up your state’s department of insurance website will give you tools to bust many myths.
The Free, Unbiased Rulebook for Your State’s Game.
The internet is full of myths and bad advice about insurance. The one place you can go for the unbiased, factual truth is your state’s Department of Insurance website. This government site is the official rulebook for the game in your state. It will have consumer guides, complaint hotlines, and clear explanations of your rights and the laws that the insurance companies must follow. It is the single most powerful, and most underutilized, myth-busting tool that any consumer has.
Use this list to debunk the common myths your friends and family have been telling you about insurance for years.
Be the Lighthouse of Fact in a Fog of Family Folklore.
Every family has its own set of insurance myths, passed down from one generation to the next like a treasured, but flawed, recipe. “You only need liability,” “red cars cost more,” “loyalty pays.” You now have the facts. You can be the lighthouse in your family’s fog of financial folklore. By sharing these simple, data-driven truths, you can help the people you care about navigate away from the costly and dangerous rocks of misinformation and towards a safer, more secure financial shore.