Common Insurance Myths That Could Be Costing You Money
By Rozmek Team
•
September 25, 2025
Insurance can be a confusing topic, and that confusion has created a lot of myths and misconceptions. Believing these myths can cause you to overpay for coverage you don't need or, even worse, leave you financially exposed when you thought you were protected.
Let's bust some of the most common and costly insurance myths out there.
Let's Bust Some Common Insurance Myths! ????
Myth #1: Red cars cost more to insure. ????
The Myth: A flashy red car is a magnet for speeding tickets and higher insurance rates.
The Fact: This is one of the oldest myths in the book, and it's completely false. Your insurance company has no idea what color your car is, and they don't ask. They set your rates based on your car's make, model, year, engine size, safety features, and repair costs—not its paint job.
Myth #2: My homeowners insurance covers floods. ????
The Myth: A standard home insurance policy will protect me from all types of water damage.
The Fact: This is a dangerously expensive misunderstanding. Standard U.S. homeowners policies explicitly exclude damage from floods (i.e., rising surface water). For that, you need a separate policy, usually from the National Flood Insurance Program (NFIP).
Myth #3: If my friend borrows my car and crashes, their insurance pays. ????♂️
The Myth: The driver's insurance is always the one that's responsible in an accident.
The Fact: In the United States, insurance almost always follows the car, not the driver. If you give a friend permission to drive your car and they cause an accident, it's your insurance policy that is primary and will have to pay the claim. This can also cause your rates to go up.
Myth #4: My personal auto insurance covers my delivery side hustle. ????
The Myth: As long as I'm driving my own car, my personal insurance covers me.
The Fact: This is a modern myth that can lead to a huge financial disaster. If you're using your car for commercial purposes—like driving for Uber, Lyft, DoorDash, or delivering pizzas—your personal auto policy will almost certainly deny your claim if you get into an accident while working. You need a separate commercial policy or a special ride-sharing endorsement.
Myth #5: I'm young and healthy, so I don't need life insurance. ????
The Myth: Life insurance is only for older people with kids and a mortgage.
The Fact: Getting a term life insurance policy when you're young and healthy means you'll lock in the lowest possible rates for decades. It's also crucial if you have private student loans with a co-signer (like a parent). A life insurance policy can pay off that debt so your loved ones aren't stuck with the bill.
Myth #6: My landlord's insurance covers my stuff. ????
The Myth: Since the building owner has insurance, my personal belongings are protected.
The Fact: Your landlord's insurance policy only covers the physical building—the walls, roof, and floors. It does absolutely nothing to protect your personal belongings. If there's a fire, a burst pipe, or a break-in, you need your own renters insurance policy to replace your laptop, furniture, clothes, and other valuables.
Don't let these common myths dictate your financial protection. By understanding the facts, you can make smarter decisions, ensure you have the right coverage, and avoid costly surprises.
Let's bust some of the most common and costly insurance myths out there.
Let's Bust Some Common Insurance Myths! ????
Myth #1: Red cars cost more to insure. ????
The Myth: A flashy red car is a magnet for speeding tickets and higher insurance rates.
The Fact: This is one of the oldest myths in the book, and it's completely false. Your insurance company has no idea what color your car is, and they don't ask. They set your rates based on your car's make, model, year, engine size, safety features, and repair costs—not its paint job.
Myth #2: My homeowners insurance covers floods. ????
The Myth: A standard home insurance policy will protect me from all types of water damage.
The Fact: This is a dangerously expensive misunderstanding. Standard U.S. homeowners policies explicitly exclude damage from floods (i.e., rising surface water). For that, you need a separate policy, usually from the National Flood Insurance Program (NFIP).
Myth #3: If my friend borrows my car and crashes, their insurance pays. ????♂️
The Myth: The driver's insurance is always the one that's responsible in an accident.
The Fact: In the United States, insurance almost always follows the car, not the driver. If you give a friend permission to drive your car and they cause an accident, it's your insurance policy that is primary and will have to pay the claim. This can also cause your rates to go up.
Myth #4: My personal auto insurance covers my delivery side hustle. ????
The Myth: As long as I'm driving my own car, my personal insurance covers me.
The Fact: This is a modern myth that can lead to a huge financial disaster. If you're using your car for commercial purposes—like driving for Uber, Lyft, DoorDash, or delivering pizzas—your personal auto policy will almost certainly deny your claim if you get into an accident while working. You need a separate commercial policy or a special ride-sharing endorsement.
Myth #5: I'm young and healthy, so I don't need life insurance. ????
The Myth: Life insurance is only for older people with kids and a mortgage.
The Fact: Getting a term life insurance policy when you're young and healthy means you'll lock in the lowest possible rates for decades. It's also crucial if you have private student loans with a co-signer (like a parent). A life insurance policy can pay off that debt so your loved ones aren't stuck with the bill.
Myth #6: My landlord's insurance covers my stuff. ????
The Myth: Since the building owner has insurance, my personal belongings are protected.
The Fact: Your landlord's insurance policy only covers the physical building—the walls, roof, and floors. It does absolutely nothing to protect your personal belongings. If there's a fire, a burst pipe, or a break-in, you need your own renters insurance policy to replace your laptop, furniture, clothes, and other valuables.
Don't let these common myths dictate your financial protection. By understanding the facts, you can make smarter decisions, ensure you have the right coverage, and avoid costly surprises.